Not All Natural Resources Stocks Win in Iran War Rally

Core Insights - The T. Rowe Price Natural Resource ETF (TURF) has gained 33.8% since its inception in June 2025, driven by an energy rally linked to the Iran conflict, with portfolio managers identifying opportunities in structural shifts beyond the Strait of Hormuz closure [1][2] Group 1: Energy Sector Performance - The energy sector has surged nearly 30% year-to-date through March, but the performance across natural resources has been uneven, with liquefied natural gas companies like Venture Global LNG, Inc. (VG) soaring 118% this year, while oilfield service firms such as Baker Hughes Co. (BKR) have fallen 12% since the war began [2] - The performance gap reflects a deeper transformation in energy markets, with countries shifting toward "resource nationalism" by stockpiling critical materials and diversifying energy sources into coal, nuclear, and renewables [3] Group 2: Demand and Production Trends - The trend of resource nationalism is boosting demand not only for oil and gas but also for uranium, copper, and rare earth minerals, while U.S. shale production is maturing, leading to a situation where American producers are not running out of oil but are depleting the cheapest reserves, which raises the floor for commodity prices [4] Group 3: TURF's Investment Strategy - TURF's active management approach allows the fund to position its portfolio towards beneficiaries of structural changes, holding 1.9% in Cameco Corp. (CCO:TSE) and 1% in Uranium Energy Corp. (UEC) as bets on the uranium stockpiling trend [5] - The fund's copper exposure includes 2.7% in BHP Group (BHP:ASX), 2.2% in Freeport-McMoRan, Inc. (FCX), and 0.8% in Southern Copper Corp. (SCCO), with agriculture representing a significant portion of the fund, including 5.5% in Corteva, Inc. (CTVA), 4.5% in Nutrien (NTR:TSE), and 3% in Archer-Daniels-Midland Co. (ADM) [6] - As of December 31, the fund's sector breakdown shows 39.1% in metals and mining, 24.9% in agriculture, 18.6% in integrated energy companies, and 12.2% in exploration and production [6] Group 4: Cost and Performance Metrics - Low-cost producers with long resource lives that offer secure supply are positioned to benefit from rising marginal costs, with parts of Canada's oil patch scoring well on these metrics [7] - TURF's expense ratio is 0.44%, and the fund has returned 13.4% year-to-date [7]