5 Best Natural Resources ETFs

In this article, we discuss 5 best natural resources ETFs to buy. If you want to read our discussion on the natural resources market, head over to 10 Best Natural Resources ETFs To Buy. 

5. Global X Lithium & Battery Tech ETF (NYSE:LIT)

5-Year Performance as of October 9: 71.33%

Introduced in July 2010, the goal of the Global X Lithium & Battery Tech ETF (NYSE:LIT) is to mimic the performance of the Solactive Global Lithium Index. The ETF enjoys investment exposure to companies engaged in the exploration, refining, and distribution of lithium. As of October 9, the ETF manages total net assets worth $2.46 billion, while maintaining an expense ratio of 0.75%

Albemarle Corporation (NYSE:ALB) one of the biggest holdings of Global X Lithium & Battery Tech ETF (NYSE:LIT). Albemarle Corporation (NYSE:ALB) specializes in the development, manufacture, and commercialization of special chemicals within three segments – Lithium, Bromine, and Catalysts. According to Insider Monkey’s second quarter database, a total of 41 hedge funds were bullish on Albemarle Corporation (NYSE:ALB). This number remained unchanged over the past quarter.

Aristotle Small/Mid Cap Equity Composite said this about Albemarle Corporation (NYSE:ALB) in its second quarter 2023 investor letter:

“Albemarle Corporation (NYSE:ALB), the world’s largest lithium producer was sold from the portfolio amidst the announcement from Chile’s president that he would nationalize the country’s lithium industry and in time transfer control from SQM and Albemarle to a separate state-owned company effectively changing long-term risk/reward ratio of the stock, in our view.”

4. First Trust Water ETF (NYSE:FIW)

5-Year Performance as of October 9: 76.91%

Introduced in May 2007, the First Trust Water ETF (NYSE:FIW) aims to replicate investment results that align with the performance of the ISE Clean Edge Water Index. This index includes companies that generate a sizable portion of their revenues from the potable and wastewater industry. As of October 9, the ETF manages total net assets worth $1.33 billion, while featuring an expense ratio of 0.53%. It is one of the best natural resources ETFs to buy. 

Advanced Drainage Systems, Inc. (NYSE:WMS) is one of the top holdings of the First Trust Water ETF (NYSE:FIW). Advanced Drainage Systems, Inc. (NYSE:WMS) specializes in the manufacture of water management solutions, including pipes and drainage. According to Insider Monkey’s second quarter database, 30 hedge funds were bullish on Advanced Drainage Systems, Inc. (NYSE:WMS), as opposed to 21 hedge funds from the preceding quarter.

Carillon Tower Advisers had this to say about Advanced Drainage Systems, Inc. (NYSE:WMS) in its Q3 2022 investor letter:

“Advanced Drainage Systems, Inc. (NYSE:WMS) rose during Q3, as the company’s water drainage systems are in high demand. While residential construction activity is plummeting due to higher rates, non-residential construction activity is less immune to higher rates. The company produces thermoplastic corrugated pipe that is lower cost and more effective than traditional concrete drainage systems. As it relates to margins going forward, many input costs for the company’s drainage systems peaked earlier this year, so the price-cost shift should move in the company’s favor going forward.”

3. Invesco Water Resources ETF (NASDAQ:PHO)

5-Year Performance as of October 9: 81.20%

Launched in December 2005, Invesco Water Resources ETF (NASDAQ:PHO) is linked to the NASDAQ OMX US Water Index which reflects on the performance of the American companies involved in the conservation and purification of water. The ETF allocates a minimum of 90% of its total assets to common stocks, American depositary receipts (ADRs), and global depositary receipts (GDRs) of companies within the water industry that are part of the underlying index. As of October 9, the ETF manages a portfolio of 40 stocks, while featuring an expense ratio of 0.60%. Invesco Water Resources ETF (NASDAQ:PHO) ranks 4th on our list of the best natural resources ETFs. 

Danaher Corporation (NYSE:DHR) is one of the prominent holdings of Invesco Water Resources ETF (NASDAQ:PHO). Danaher Corporation (NYSE:DHR) specializes in the manufacture of medical, industrial, and professional products within these four segments – Biotechnology, Life Sciences, Diagnostics, and Environmental & Applied Solutions.

According to Insider Monkey’s second quarter database, 89 hedge funds were bullish on  Danaher Corporation (NYSE:DHR). In comparison, 90 hedge funds held a similar position in the company during the past quarter.

Third Point Management had this to say about Danaher Corporation (NYSE:DHR) in its second quarter 2023 investor letter:

“Danaher Corporation (NYSE:DHR) is our longest held investment and remains a top five position. Danaher has underperformed the S&P 500 this year due to a slowdown in the bioprocessing industry and more cautious spending by biopharma customers. Bioprocessing is a key end-market that drives more than a quarter of Danaher’s profits. Bioprocessing products are the main inputs that biopharma companies use to manufacture biologic drugs, which are the fastest growing category of drugs, growing low-to-mid-teens and representing a sizable portion of the clinical pipeline.”

2. Global X Uranium ETF (NYSE:URA)

5-Year Performance as of October 9: 101.17%

Introduced in November 2010, the Global X Uranium ETF (NYSE:URA) aims to mimic the performance of the Solactive Global Uranium & Nuclear Components Total Return Index. The ETF provides exposure to companies engaged in uranium mining and the production of nuclear components. As of October 9, the ETF held total assets worth $2.03 billion, while featuring an expense ratio of 0.69%.

Cameco Corporation (NYSE:CCJ) is the biggest holding of Global X Uranium ETF (NYSE:URA). Cameco Corporation (NYSE:CCJ) is involved in the exploration, mining, and commercialization of uranium for the generation of electricity within two segments – Uranium and Fuel Services. According to Insider Monkey’s second quarter database, 54 hedge funds were bullish on Cameco Corporation (NYSE:CCJ), as opposed to 49 hedge funds in the preceding quarter. 

Aristotle Capital’s International Equity strategy said this about Cameco Corporation (NYSE:CCJ) in its second quarter 2023 investor letter:

“Cameco Corporation (NYSE:CCJ), the world’s largest publicly traded uranium producer, was the top contributor during the period. Over the past year, there has been a rise in support from governments and policymakers for nuclear energy as countries realize it can play a crucial role in lowering dependence on fossil fuels to meet environmental pledges and goals. In addition, Russia’s war in Ukraine had led to an increase in the price of competing carbon fuels and heightened attention on energy security. Although such global market dynamics have likely favored Cameco in the short term, we believe the company will benefit long term from its financial discipline and advantaged assets. (Its Canadian mines—Cigar Lake and McArthur River/Key Lake— produce some of the world’s highest‐grade uranium.) Cameco has also slowly ramped up production while obtaining long‐term contracts.”

1. Sprott Uranium Miners ETF (NYSE:URNM)

5-Year Performance as of October 9: 243.49%

Sprott Uranium Miners ETF (NYSE:URNM) was launched in December 2019, with the aim to allocate at least 80% of its overall assets into securities listed in the North Shore Global Uranium Mining Index. The index monitors the performance of companies that allocate at least 50% of their assets to the uranium mining sector, in activities such as mining, exploration, development, and production of uranium. As of October 9, the ETF holds net assets valued at $1.33 billion, while featuring an expense ratio of 0.83%. Sprott Uranium Miners ETF (NYSE:URNM) is one of the best natural resources ETFs to buy. 

NexGen Energy Ltd. (NYSE:NXE) is one of the prominent holdings of Sprott Uranium Miners ETF (NYSE:URNM). NexGen Energy Ltd. (NYSE:NXE) engages in the exploration, development, acquisition, and evaluation of uranium properties in Canada. According to Insider Monkey’s second quarter database, 19 hedge funds were bullish on NexGen Energy Ltd. (NYSE:NXE). In comparison, 17 hedge funds had invested in the company during the past quarter. 

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