|
|
|
| iShares
Goldman Sachs Natural Resources Fund (IGE) |
Published: June 14, 2004
The Goldman Sachs Natural Resources iShares (IGE)
offers superior diversification benefits when compared with most other
ETFs that we follow. The fund invests mostly in oil-related industries.
Oil stocks comprise 61.1% of the fund, with oil service firms accounting
for an additional 13.6%. Unlike the Energy SPDR (XLE) and the Oil
Service HOLDR (OIH), however, this fund also invests in a number of
other industries, including metals (12.8%) and paper (8.5%).
The addition of stocks in non-oil related industries allows IGE to show
a correlation of less than 50% with the Nasdaq-100 and below 70% vis-à-vis
the broad stock market. It also is only correlated at the 75.0% level
with OIH and 86.9% with XLE.
Not surprisingly, the fund's largest holdings include British Petroleum
(BP, 8.02%) and ExxonMobil (XOM, 7.88%). Nearly half of the portfolio's
value comes from its top 10 holdings. Only two of those stocks--Alcoa
(AA, 2.78%) and International Paper (IP, 2.11%)--are in non-energy
related areas.
Is there a reason to own this fund instead of simply
holding XLE or OIH? I do need to point out that its daily trading volume
is low. It averaged fewer than 20,000 shares per day in May. Still, the
fund does offer at least a small play in something other than energy and
there really is no other similar fund available (at least until we
finally see a Gold ETF). I have included the fund in the selection list
for my Model ETF Portfolio, but due to its low daily
volume, I will not make weekly trade recommendations using IGE.
| iShares
Goldman Sachs Natural Resources (IGE) |
| Type: |
Sector Fund |
|
|
|
|
| Similar funds: |
Energy
SPDR (XLE) |
|
|
Oil
Service HOLDR (OIH) |
|
| Options?: |
No |
|
|
|
|
|
|
|
|
|
|
| Performance
Data |
|
|
|
|
| 52-week High: |
$113.60 |
4/19/2004 |
|
Annualized
return since: |
| 52-week Low: |
$85.74 |
7/15/2004 |
|
One-year |
18.97% |
| YTD Return: |
3.17% |
(as
of 5/21/2004) |
Three-year |
N/A |
|
|
|
|
Five-year |
N/A |
| Dividends: |
$1.40 |
past 12-mos |
Life of fund* |
6.14% |
| Expense Ratio: |
0.50% |
|
|
*
- Started trading 10/26/2001 |
|
|
|
|
|
|
| Correlation
Data* |
(1/02/02-5/28/04) |
Holdings* |
(as of
6/4/2004) |
| Dow
Jones Industrials |
65.6% |
|
BP PLC
(BP) |
8.02% |
| S&P 500 |
|
62.8% |
|
Exxon
Mobil (XOM) |
7.88% |
| Nasdaq
Composite |
51.7% |
|
Chevron-Texaco
(CVX) |
7.81% |
| Nasdaq-100 |
|
49.3% |
|
Royal
Dutch Petro (RD) |
7.20% |
|
|
|
|
Conoco-Phillips
(COP) |
5.28% |
| XLE |
|
86.9% |
|
Schlumberger
(SLB) |
3.46% |
| OIH |
|
75.0% |
|
Alcoa (AA) |
2.78% |
|
|
|
|
Intl.
Paper (IP) |
2.11% |
|
|
|
|
Encana
(ECA) |
1.96% |
|
|
|
|
Occidental
Petro (OXY) |
1.79% |
|
|
|
|
*
Percent top ten are of total |
48.29% |
|
|
|
|
|
|
| Average
Daily Volume |
|
Average
Daily Price Range |
| May-04 |
16,645 |
|
|
Apr-04 |
1.5% |
| 2004 YTD |
23,774 |
|
|
2004 YTD |
1.4% |
| 2003 |
8,095 |
|
|
2003 |
1.0% |
| *
- Correlation measures how closely the two items track each
other |
|
*
Includes prior day's close (true range) |
HOW TO MAKE MONEY IN IGE THIS
YEAR
It is fairly easy to figure out how you should be trading IGE if you
look at my chart and have read my book on Elliott Wave Theory. Prices
recently completed a clear three-wave fall in a fourth-wave correction.
The fund is now on its way to a new high. How high will it get? I would
look for $115-$120 during the summer of 2004.
After that, things get a lot less favorable. IGE
bottomed at $71.10 in October 2002. A 50% retracement of the fund's
recent gains would cause IGE to fall below $100 during 2005. Although
that is a large loss, it is a whole lot smaller than what we're likely
to see in other industries, such as technology. If you must hold a
sector though, then this will be one that will lose you less money
during a market downturn. And since I fully expect the market to turn
lower before the November election, IGE might make a good defensive
choice.
|
|
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