A comparison between the two since the top in oil prices back in June 2014 demonstrates that ability: The crucial point to understand here is that QAT is a superior hedge to XLE due to its ability to weather periods of declining commodity prices. One could argue that an investment in QAT is no better hedge than the Energy Select SPDR Fund ETF ( XLE), especially since the latter is up more than QAT so far this year. And even real estate has historically benefited from rising commodity prices, as increasing household disposable income pushed house prices, but let's discount that out of conservatism, if nothing else. Only businesses in the Healthcare, Consumer Staples, Utilities, Communications, and the Real Estate sectors (a combined 15% of the ETF) do not benefit directly from increases in commodity price increases. For QAT in particular, close to 85% of the holdings benefit from a rise in commodity prices. That figure is likely to rise sharply in 2022 as commodity prices (particularly oil and gas) jumped following Russia's war on Ukraine. Approximately 47% of Qatar's GDP comes from Hydrocarbons, according to official data for 2019. The jump in commodity prices buoyed QAT 12% so far this year.

Stocks That Offer A Safe Hedge To Higher Commodity Prices QAT is trading at 16x TTM earnings and has a dividend yield of 2%. Industrials, Materials, and Energy are the three next biggest sectors with a weighting of 14.7%, 8.5%, and 8.2% respectively. More than 50% of the ETF's holdings are from the financial sectors. The ETF is highly correlated to the country's main QE index in terms of directional movement and the constituents, but the ETF does not seek primarily to mirror the performance of the index. It has 32 total holdings and aims to provide investors with exposure to stocks of companies based in Qatar. The iShares MSCI Qatar ETF is relatively small, with almost $110 million in assets. I believe investors who are wary of inflation should allocate a certain percentage of their portfolio to QAT to get some protection in case commodity prices continue to rise. Despite its small size and relative obscurity, the iShares MSCI Qatar ETF ( NASDAQ: QAT) can offer investors a reliable dividend and an exemplary hedge against inflation.

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