Dave Nadig talks about raw materials and infrastructure



With energy prices skyrocketing since the start of the year, there are various opportunities in the market. Joining the “ETF Report” with host Alexis Christoforous on Yahoo Finance, CIO and Research Director of ETF Trends, Dave Nadig, discusses the energy sector, his investor choices in this environment of high inflation and the latest market news from China.

Nadig makes it clear that the big winners are funds directly tied to the prices of some of the commodities that are skyrocketing. For example, the American Petroleum Fund (USO) is up 65% for the year, and the U.S. Natural Gas Fund (UNG) is up 115%, which is great for investors who have signed up for these ETFs.

For most investors worried about long-term inflation, Nadig believes that exposure to basic commodities makes more sense than trying to choose which of these people will be the big winner in the future. More precisely, Nadig notes the Invesco Diversified commodities strategy with optimal yield No K-1 ETF (PDBC), a very simple large commodity fund that offers some exposure to energy, as well as agricultural components, precious metals, industrial products and more to describe the scope of this growing inflationary environment.

“For many investors, this core allocation to commodities has been a big rescue over the past six to seven months as we’ve seen prices rise,” Nadig adds. “If you are looking for a way to take advantage of some of these short term spikes, I think this is a good way to do it.”

The KWEB favorite

Change gears to discuss the KraneShares Trust China Internet ETF (KWEB), this ETF is down about 40% since the start of the year, 56% from its peak. It is a sector that has been beaten, which begs the question of whether or not it is time for investors to get started. While Nadig thinks people may think it has to do with short-term economic control, he thinks it’s really about restoring command and control to the Communist Party. With that in mind, looking under the hood of things like KWEB, these are not the kind of stocks set up to be squashed.

Nadig adds: “China is not backing down. They are not going to give up on the Internet revolution. They are only changing the rules of the game locally, within their country. They have yet to capitalize on their ability to dominate the world. “

KWEB, at this point, has been a falling knife. Billions have poured into this fund over the past 6-10 weeks, a smart gambling game. While Nadig can’t quite call it all a bottom line, it feels like the worst is over.

Set new limits

Looking at the deal in Washington DC, if it can lead to an extension of the debt limit and help avert disaster, then lawmakers can think about the infrastructure bill. Does all of this equate to high demand for infrastructure companies?

According to Nadig, no. He has seen that level of demand drop a bit in recent months. Despite attempts by some investors to NFRA and PAVE, the momentum has weakened, given how difficult it is to get significant infrastructure spending through this Congress. That’s not to say it still can’t happen, but it’s not easy ETF trading.

“If we get this deal and we get this spending package,” Nadig continues, “it will be great in the short term for the US economy. I think we’ll see a big rally in Q4 if everything goes the way we often think. But I think ‘Falltober’ will probably live up to its name.

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