First Trust Exchange-Traded Fund II First Trust Indxx Global Natural Resources Income ETF (FTRI) seeks to track the Indxx Global Natural Resources Income Index, which measures the performance of dividend-paying companies worldwide engaged in natural resources sectors including energy, materials, and utilities. This international equity ETF provides exposure to income-generating natural resource companies across developed and emerging markets.
How It Works
FTRI uses a passively managed approach that replicates its benchmark index through market-capitalization weighting of constituent securities. The fund focuses on companies that derive significant revenue from natural resources extraction, processing, or distribution while maintaining dividend payment histories. Holdings are screened for dividend sustainability and yield thresholds. Rebalancing occurs quarterly to maintain sector allocations and replace companies that no longer meet dividend or natural resources criteria.
Key Features
- Combines natural resources exposure with dividend income focus, targeting companies with sustainable payout histories in commodity sectors
- Global diversification across developed and emerging markets reduces single-country concentration risk common in resource-focused investments
- 2.43% dividend yield provides current income while participating in natural resources sector growth and inflation hedging potential
Risks
- This ETF can lose significant value during commodity price downturns, as natural resources companies are highly sensitive to underlying material prices
- Currency fluctuations from international holdings can reduce returns for U.S. investors, particularly during dollar strength periods affecting emerging markets
- Sector concentration in cyclical natural resources means potential 40-50% declines during economic recessions when commodity demand falls sharply
Who Should Own This
Best suited as a satellite holding (5-15% of portfolio) for income-focused investors with medium-to-high risk tolerance and 3+ year time horizons seeking inflation protection. Appropriate for investors wanting natural resources exposure with dividend income component. Requires tolerance for commodity price volatility and international market fluctuations.