A sound investment process and strong management team underpin iShares North American Natural Res ETF's Morningstar Medalist Rating of Gold. The portfolio maintains a cost advantage over competitors, priced within the least expensive fee quintile among peers.  

 The strategy's sensible investment philosophy merits a High Process Pillar rating. Independent of the rating, analysis of the strategy's portfolio shows it has maintained a significant overweight position in yield exposure and an underweight in liquidity exposure compared with category peers. High yield exposure is attributed to holding more stocks with high dividend or buyback yields. And a low liquidity exposure is rooted in stocks with lower trading volumes, limiting managers' flexibility. The strategy’s management team earns an Above Average People Pillar rating. The strategy's parent organization earns the firm an Above Average Parent Pillar rating. People Pillar and Parent Pillar ratings for this strategy are indirectly assigned by a Morningstar analyst rather than algorithmically derived. Please see the notes following each pillar section for more details. The details of assigning methods can be found in each pillar section.

Analyst Rating

Chevron

Exxon Mobil

ConocoPhillips

Canadian Natural Resources

EOG Resources

Enbridge

Marathon Petroleum

Freeport-McMoRan

Schlumberger

Phillips 66

Morningstar's evaluation of this security's process aims to determine the likelihood that it will outperform its Morningstar Category benchmark on a risk-adjusted basis over the long term. iShares North American Natural Res ETF earns a High Process Pillar rating. The leading factor in the rating is that this fund tracks an index. Historical data, like Morningstar's Active/Passive Barometer, finds that passively managed funds have generally outperformed their active counterparts, especially over longer time horizons. Excellent risk-adjusted performance also influences the rating. This can be seen in the fund's five-year alpha calculated relative to the category index, which suggests that the process was successful over that period. The firm's five-year retention rate of 92% supports the process as well.

The investment strategy as stated in the fund's prospectus is:  The investment seeks to track the investment results of the S&P North American Natural Resources Sector Index composed of North American equities in the natural resources sector.  The fund generally invests at least 80% of its assets in the component securities of its underlying index and in investments that have economic characteristics that are substantially identical to the component securities of its underlying index and may invest up to 20% of its assets in certain futures, options and swap contracts, and cash and cash equivalents. The underlying index measures the performance of U.S.-traded stocks of natural resource-related companies in the U.S. and Canada. 

 The portfolio is overweight in energy by 52.1 percentage points in terms of assets compared with the category average, and its consumer cyclical allocation is similar to the category. The sectors with low exposure compared to category peers are basic materials and industrials, underweight the average by 33.6 and 10.5 percentage points of assets, respectively. The portfolio is composed of 128 holdings and is relatively concentrated. In particular, 44.0% of the strategy's assets are housed within the top 10 holdings, as opposed to the category’s 23.9% average. And in closing, in terms of portfolio turnover, on a year-over-year basis, 11% of the fund's holdings have turned over, whether through increasing, decreasing, or changing a position.

High

Process

iShares North American Natural Res ETF benefits considerably from its equity team, earning it an Above Average People Pillar rating. There are three managers listed on the fund: Paul Whitehead, Jennifer Hsui, Greg Savage. The team is well equipped, with an average of 18 years of portfolio management experience. Together, they manage a total of 257 strategies, with solid long-term prospects. The strategies average a Silver asset-weighted Morningstar Medalist Rating, indicating a position to deliver positive alpha relative to the category median in aggregate.  

 Note: This People Pillar rating is indirectly assigned by an analyst. Morningstar analysts evaluate the People Pillar for passive products at the brand level and may also differentiate by asset class. There is at least one other passive strategy at the firm that is covered by a Morningstar analyst, so the People Pillar rating of the fund is inherited from the rating that the Morningstar analyst assigned to investment vehicles under the same brand name.

Above Average

People

BlackRock offers compelling options across asset classes and vehicles. It earns an Above Average rating for Parent. 
The firm’s approximately USD 8 trillion in assets under management, as of Sept. 30, 2022, gives it unparalleled scale and influence. It is a market-leading index fund provider globally, and its iShares exchange-traded fund franchise offers a low-cost lineup of core funds that investors can use to build a well-diversified portfolio for dirt cheap. The firm can be more adventurous in its ETF launches than some peers, so not everything it launches is appropriate for the masses. As a result, it is likely to have more ETF closures than peers that stick to the basic building blocks.  
The firm’s active fixed-income and multi-asset efforts also stand out as some of the best in the industry. Those benefit from BlackRock’s commitment to building a first-class risk management system via its Aladdin analytics software. The software is also available for sale to other firms and has proved to be a popular option for competitors, a testament to its usefulness. 
More recently, the firm has shifted its focus to ESG offerings and incorporating ESG across its investment lineup, leading to a political backlash in the United States.
BlackRock isn’t the best at everything it tries to do, but retail investors, financial advisors, and large institutions could all build robust portfolios using BlackRock’s products.

Parent

iShares North American Natural Resources ETF

IGE tracks a market-cap-weighted index of US-listed natural-resource-related companies.

IGE is a passively managed ETF that tracks the S&P North American Natural Resources Sector Index. IGE and XLE have similar sector compositions, but IGE has a lower weighting in the top three holdings. IGE may provide a superior return due to overvaluation and overweighting of top holdings in XLE, the fund's similar risk return ratios, and larger expected multiple expansion for IGE.

IGE: Natural Resources Alternative To XLE

The iShares North American Natural Resources ETF is a strong exchange-traded fund for investors looking to gain exposure to North American companies in the natural resources sector. The IGE ETF has a low expense ratio of 0.41% and holds a diverse range of companies involved in the exploration, production, or distribution of natural resources. The fund's top holdings are concentrated in the energy sector, and while it has lagged behind pure play energy funds, it offers a more diversified option for investors.

IGE: Largely Energy, And Worth A Look

iShares North American Natural Resources ETF (IGE) tracks an index of U.S. natural resource companies. IGE focuses on the energy and materials sectors, while specifically excluding the Chemical and Steel industries.

IGE: Strong Returns In The North American Energy Sector

IGE is a broad portfolio of US oil companies. Capacity is very tight, with refineries and rigs being underinvested, and the capacity for OPEC production growth is ultimately pretty limited.

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