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Evolving Themes: Global Mining


Sector positioning


SHAWN REYNOLDS: Right now, the overall mining exposure in the fund [Van Eck Global Hard Assets Fund] is not that great.  It's probably less than it is historically.  But we do see the theme on the mining sector really unfolding over the next several years, and it's something that we're monitoring very closely and see a lot of great opportunities in the very near future.


Strategic restructuring


REYNOLDS: There's been a big transition in the mining sector over the last year or so, and pretty much every major mining company in the world has had a new CEO, a new CFO, or a new COO, and that goes really across the board. There's something like 65 different management changes in the industry over the last 12 months. That's really changing the strategy.


The strategy for the last several years has been really all about growth – and in some cases growth at any cost.  The new paradigm shift is really focused on expense reduction, margins, returns, and eventually getting to a higher value and higher valuation. That's really going to be driven by a couple of things. First is focusing on expenses and getting operating expenses and overhead expenses down. You might call the low-hanging fruit.  And then there's the second phase, which is to focus on better investments in terms of maintenance, cap-ex, and just high-grading what you're doing and the assets that you have today.  That should really end up helping your returns and eventually your valuation.  The final phase is cutting back on cap-ex. Cap-ex has been blowing out over the last 10 or 15 years.


Van Eck's Views On Global Supply/Demand Dynamics


REYNOLDS: Now you're seeing a significant reduction in the amount of investment that the mining companies are making and that will eventually lead to lower supply. We look maybe two to five years out and we see a lot of these commodities – their supply-demand balance – start getting tighter and eventually leading to higher prices. That would be the third phase that would really help the entire industry.  We would also expect to see a little valuation improvement on the back of that.


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IMPORTANT DISCLOSURE


The views and opinions expressed are those of the speaker and are current as of the video's posting date. Video commentaries are general in nature and should not be construed as investment advice. Opinions are subject to change with market conditions. All performance information is historical and is not a guarantee of future results. For more information about Van Eck Funds, Market Vectors ETFs or fund performance, visit vaneck.com. Any discussion of specific securities mentioned in the video commentaries is neither an offer to sell nor a solicitation to buy these securities. Fund holdings will vary. All indices mentioned are measures of common market sectors and performance. It is not possible to invest directly in an index. Information on holdings, performance and indices can be found at vaneck.com.


Sean Reynolds is the Portfolio Manager of Van Eck Global’s actively managed mutual fund Van Eck Global Hard Assets Fund and is not involved in the portfolio management of Van Eck’s passively managed Market Vectors ETFs.


Important disclosure for Van Eck Global Hard Assets Investors:  You can lose money by investing in the Fund. Any investment in the Fund should be part of an overall investment program, not a complete program. The Fund is subject to risks associated with concentrating its investments in hard assets and the hard assets sector, including real estate, precious metals and natural resources, and can be significantly affected by events relating to these industries, including international political and economic developments, inflation, and other factors. The Fund’s portfolio securities may experience substantial price fluctuations as a result of these factors, and may move independently of the trends of industrialized companies. The Fund’s investments in foreign securities involve risks related to adverse political and economic developments unique to a country or a region, currency fluctuations or controls, and the possibility of arbitrary action by foreign governments, including the takeover of property without adequate compensation or imposition of prohibitive taxation. The Fund is subject to risks associated with investments in debt securities, derivatives, commodity-linked instruments, illiquid securities, asset-backed securities and CMOs. The Fund is also subject to inflation risk, short-sales risk, market risk, non-diversification risk, leverage risk, credit risk and counterparty risk. Please see the prospectus for information on these and other risk considerations.


Please note that Van Eck Securities Corporation offers additional investment products that invest in the asset class(es) included in this video [Market Vectors Unconventional Oil & Gas ETF]. Important disclosure for Unconventional Oil & Gas ETF Investors:  Investments in the unconventional oil and gas sector are exposed to certain risks which include, among others, volatility of energy prices, exploration and production spending, operating hazards, limited production history, royalty interests, liens and other burdens, third party pipeline availability and capacity, and an evolving regulatory environment. Additionally, the Fund is subject to changes in economic and political conditions, foreign currency fluctuations, changes in foreign regulations and other risks inherent to international investing. Investors should be willing to accept a high degree of volatility and the potential of significant loss. The Fund may loan its securities, which may subject it to additional credit and counterparty risk. See the Fund’s prospectus and summary prospectus for more complete information regarding investment risks.


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ETF Fund shares are not individually redeemable and will be issued and redeemed at their NAV only through certain authorized broker-dealers in large, specified blocks of shares called "creation units" and otherwise can be bought and sold only through exchange trading. Creation units are issued and redeemed principally in kind. Shares may trade at a premium or discount to their NAV in the secondary market. You will incur brokerage expenses when trading Fund shares in the secondary market. Past performance is no guarantee of future results. Returns for actual Fund investments may differ from what is shown because of differences in timing, the amount invested, and fees and expenses.


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