Russia has been tightening its military grip around Ukraine over the last year, amassing tens of thousands of troops, equipment and artillery on the country’s front door. Things are escalating and if the conflict worsens, here are some ETF strategies investors may want to consider.
Natural Gas & Crude Oil
In 2021, Russia exported around 55.5 billion U.S. dollars’ worth of natural gas to other countries worldwide. 40% of the oil that Europe uses comes from Russia and any disruption in production because of a war, would cause a surge in pricing. We have already seen a huge spike in Natural Gas and Oil prices continue to rise.
UNITED STATES OIL FUND (USO) up 18% YTD
UNITED STATES NATURAL GAS FUND LP (UNG) up 21% YTD
PROSHARES ULTRA BLOOMBERG NATURAL GAS (BOIL) up 27% YTD
Russia is a commodity-rich nation. Russia’s top exports are Natural gas and Oil, Gems, Precious Metals, Wheat, Corn, Copper and Aluminum. A disruption in production in any of these items will definitely cause a spike. Ukraine is also one of the largest exporters of wheat, much of their production goes to Egypt and other Middle Eastern countries.
TEUCRIUM WHEAT FUND ETV (WEAT) up 6% YTD
ABERDEEN STANDARD PHYSICAL PALLADIUM SHARES ETF (PALL) up 28% YTD
TEUCRIUM CORN FUND ETV (CORN) up 9% YTD
If the conflict was protracted and the US was dragged in for any reason, it’s likely that many of the so-called War Stocks would benefit. Some of the companies that benefit from war are Alliant Techsystems (ATK), Boeing (BA), General Dynamics (GD),
L-3 Communications (LLL), Lockheed Martin (LMT) and Northrop Grumman (NOC). With the future unknown, ETFs are probably a safer way to play this space rather than getting involved in all of these individual companies.
Aerospace & Defense ETFs to consider
ISHARES U.S. AEROSPACE & DEFENSE ETF (ITA)
SPDR S&P AEROSPACE & DEFENSE ETF (XAR)