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11/19/14: “Due diligence in Middle East/Gulf reveals solid investments. Waiting to buy cheap? It probably won’t happen.”View more tweets >>
09/11/14: Is the tide turning for emerging markets? David Semple analyzes the emerging markets economies and believes “the asset class is on track to offer higher economic growth for the remainder of 2014 . . . and as we move into 2015.”View article >>
04/15/14: According to The Wall Street Journal, turmoil in China and Russia have curtailed gains for income-seeking funds. “Look at it from the perspective of a conservative U.S. investor who’s looking for yield,” says David Semple. “You may get your yield in due course, but you’ll get your volatility with that.”View article >>
04/10/14: Despite the hit emerging markets companies have recently taken, some money managers believe there are still worthwhile opportunities. According to David Semple, “There are state-owned businesses that deserve to trade at discounts, but you can find real growth stories that sell at reasonable prices.”View article >>
12/05/13: CNN Money polls money managers for top stock ideas for 2014. David Semple weighs in and discusses his views on oil demand in Southeast Asia. “Oil demand from this region is clearly very strong, and this company seems to be at the center of it.” View article >>
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By: David Semple, Portfolio Manager
Fund's recent performance >>
The Van Eck Emerging Markets Fund declined 2.53% in the third quarter.
In China we are increasingly seeing the dynamic of quantity vs. quality,
in terms of growth coming to the fore; for example, the property
market may be weak but will there be any government stimulus?
The government has indicated it is prepared to show flexibility
in growth targets for the sake of higher quality
growth. However, this can
be challenging in the short term. While we believe
reforms are on the right path, some of them, e.g.,
the anti-corruption campaign and the shedding of excess capacity,
have impacted growth. One of the most exciting future
market developments will be the October 27 launch of the
Shanghai-Hong Kong Stock Connect or so-called “through train.”
This will for the first time allow Chinese investors to trade more
than 250 Hong Kong-listed companies and provide Hong Kong investors direct access to Shanghai-listed
stocks or A-shares.
Although a strengthening U.S. dollar has traditionally been
bad for emerging markets, gearing
of the emerging markets to the U.S. dollar has diminished. The
negative correlation is still present but the delta is smaller. A
stronger U.S. dollar is less important to domestic emerging markets
economies, posing more of a risk instead to the export and
The big question now is: what will happen when interest
rates normalize, i.e., increase, in the U.S.? While U.S. markets are looking to rate normalization, the European markets are weaker, hosting questions about deflation and more
quantitative easing. Even though we believe it may be “one step
back,” we believe it’s a case of “two steps forward” afterward. The growth outlook for emerging markets is stable to mildly better.
Rather than play emerging markets as some kind of global beta, we still need to focus on companies and countries that can
do their own “self-help” and have their own dynamics.
We will continue to attempt to construct a robust,
diversified portfolio that represents long-term structural growth
opportunities – “self-help compounding investments.” We will
also continue to resist the siren call of indices for “weightings” in
inefficient companies that reduce tracking error, which we believe could be a poor use of the Fund’s capital. The advantage of being able to avoid
certain larger capitalization names that generally tend to be in
cyclical industries and/or may be subject to increased government
involvement is ours. As we go forward, we will continue to pursue
attractive investments that we believe can deliver the embedded
growth that characterizes emerging market countries.
Read full 3Q Commentary
Jan van Eck
"The emerging markets have been rewarded for their reform moves. Mexico is a country that has gotten its act together in terms of instituting reforms in areas such as energy policy. No longer is Pemex the sole developer of all Mexican energy assets and I think that's very positive in the long run."
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Portfolio Manager, Van Eck Emerging Markets Equity Strategy
Portfolio Manager, Van Eck Emerging Markets Investment Team
"There are large companies and large sectors in the emerging markets that we don't think have a particularly good outlook right now. However, we believe that we can find some opportunities that are structural growth opportunities that play on what people think they're getting with emerging markets but normally often don't achieve with many of the more index-driven products."
Portfolio Manager, Van Eck Emerging Markets Fund
"Over time, we think that there will be increasing idiosyncrasies from country to country. Allied to that is the effect of tapering which should sort out which countries are stronger than others. Our thesis last year was to not see emerging markets as a beta block but rather as a collection of countries where we can pick the best stocks."
The expansion of domestic consumption, currently a main driver of growth potential, continues to foster a strong case for investment in the emerging markets.
Emerging Markets Defined
The term “Emerging Markets” is typically used to describe business and market activity in industrializing or emerging regions of the world. An “emerging market country” is any country that has been determined by an international organization, such as the World Bank, to have low to middle economic activity. Emerging markets often have unique economic fundamentals and cycles.
Long term, an allocation to emerging markets may provide diversification benefits as emerging markets tend to be less correlated to traditional asset classes than their developed market peers. Read more >>
Unless otherwise stated, portfolio facts and statistics are shown for Class A shares; other classes may have different characteristics.
†NAV: Unless you are eligible for a waiver, the public offering price you pay when you buy Class A shares of the Fund is the Net Asset Value (NAV) of the shares plus an initial sales charge. The initial sales charge varies depending upon the size of your purchase. No sales charge is imposed where Class A or Class C shares are issued to you pursuant to the automatic investment of income dividends or capital gains distributions. It is the responsibility of the financial intermediary to ensure that the investor obtains the proper “breakpoint” discount. Class C, Class I and Class Y do not have an initial sales charge; however, Class C does charge a contingent deferred redemption charge. See the prospectus and summary prospectus for more information.
1Van Eck Associates Corporation (the “Adviser”) has agreed to waive fees and/or pay Fund expenses to the extent necessary to prevent
the operating expenses of the Fund (excluding acquired fund fees and expenses, interest expense, trading expenses, dividends and
interest payments on securities sold short, taxes and extraordinary expenses) from exceeding 1.60% for Class A, 2.50% for Class C,
1.00% for Class I, and 1.10% for Class Y of the Fund’s average daily net assets per year until May 1, 2015. During such time, the
expense limitation is expected to continue until the Board of Trustees acts to discontinue all or a portion of such expense limitation.
2The Morgan Stanley Capital International (MSCI) Emerging Markets Index, calculated with dividends reinvested, captures 60% of the publicly traded equities in each industry for approximately 21 emerging markets. The Morgan Stanley Capital International (MSCI) Emerging Markets Small Cap Index, calculated with dividends reinvested, targets companies that are not in the standard emerging markets index.
The views and opinions expressed are those of Van Eck Global. Fund manager commentaries are general in nature and should not be construed as investment advice. Opinions are subject to change with market conditions. Any discussion of specific securities mentioned in the commentaries is neither an offer to sell nor a solicitation to buy these securities. Fund holdings will vary.
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 the risks associated with its investments in emerging markets securities, which tend to be more volatile and less liquid than securities traded in developed countries. 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, CMOs and small or mid-cap companies. The Fund is also subject to inflation risk, short-sales risk, market risk, non-diversification risk and leverage risk. Please see the prospectus and summary prospectus for information on these and other risk considerations.
Investing involves risk, including possible loss of principal. An investor should consider investment objectives, risks, charges and expenses of the investment company carefully before investing. The prospectus and summary prospectus contain this and other information. Please read them carefully before investing.
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