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4/9/14: According to Charl Malan, “[Copper] companies are struggling to get projects on line…A year ago, the surplus for 2014 was much bigger than what we think it is today and in the numbers I am seeing today people are not discounting two very big mines that aren’t operating properly.”View article »
4/4/14: Glencore Xstrata’s former full-time chairman, Tony Hayward, was deposed in May 2013 and the search for his replacement is underway. Charl Malan says, “I would like a chairman who has multinational corporate experience, an entrepreneur-like mind-set and who is strong.” View article »
4/3/14: Zacks highlights five “top rated” precious metals mutual funds and includes GHAAX. Each fund included “has earned a Zacks #1 Rank (Strong Buy) as we expect the fund to outperform its peers in the future.”View article »
3/6/14: The Wall Street Journal speaks to investment authorities on the future price of palladium in light of possible interruptions in Russian shipments. Charl Malan says, “Tomorrow this whole [Ukraine] thing might be over. I have a much better insight of where platinum supply is going to go than I can have as to what [Russian President Vladimir] Putin is going to do tomorrow.” View article »
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The Fund underperformed its commodity equities-based benchmark index, the Standard & Poor’s® (S&P) North American Natural Resources Sector Index (SPGINRTR), which returned -10.03%. The Fund’s negative performance during the quarter was due primarily to its positions in the Energy sector, these detracted most significantly from the Fund’s total return.
While they had already started to stir in the second quarter of this year, the macroeconomic headwinds really started to blow during the third quarter. They came from a number of different directions. First, the current fluidity in the Ukraine/Russia situation continued to weigh on the markets and, in particular, the Euro. Both the EU and the U.S. announced further sanctions during the quarter, a portion of which related to the Financial Services and Energy sectors. And before the close of September, Russian stocks were down some 20% from their June peak in U.S. dollar terms.
Second, growth in Europe’s powerhouse, Germany, slowed, also adversely affecting the Euro, with weakness in the Euro accelerating after the decision of the Governing Council of the European Central Bank (ECB) on September 4 both to lower the ECB’s benchmark interest rate to 0.05% and, after its meeting, to begin buying covered bonds and asset-backed securities, but not government bonds. Third, one of the short-term side effects of the uncertainty surrounding the outcome of the Scottish independence referendum right up until the result it appeared to be a neck and neck race was a weaker British pound.
And, fourth and finally, the Fed’s sentiment looks, now, to be somewhat changed from what it was. Yes, things will likely continue to remain easy, but, it would appear, future actions will now be more data dependent then they previously were. Rather than just staying the course regardless, inputs such as rising inflation, a stronger economy, and employment growth may signal the Fed could be setting off on the path to raising interest rates. Couple the changed signals coming from the Fed with both a weak Euro and sterling, and continuing worries about China, and the consequence was a very strong U.S. dollar during the quarter. Commodities suffered accordingly.
We started the year and continued through the first half with what appeared to be synchronized global expansion and what looked like global GDP growth with some degree of momentum. Admittedly, there were some headwinds, but they were, rather, more breezes than winds. However, in the third quarter, with the introduction of a few more macro uncertainties, these turned into actual winds and, subsequently, growth sputtered.
Read full 3Q Commentary »
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Metals & Mining Analyst
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Portfolio Manager, Van Eck Global Hard Assets Investment Team
"The U.S. energy renaissance is a remarkable resurgence in oil and gas production here in the United States... It’s up over 50% in the last five years, growing at a steep rate. There’s no other country or region in the world that has grown that fast that quickly in the last 30 or 40 years."
"We believe that towards the latter part of 2014 capital management, defined as cost management and CAPEX reductions, will be a potential significant kicker for higher earnings. It will ultimately develop into a higher rating for metals and mining companies through either a cash flow multiple or an EV/EBITDA multiple."
"We're headed toward the U.S. planting season and the USDA has come out with its initial estimates. They predict very good acreage numbers, both in corn and soy. Assuming normal weather, we expect another good crop which should ultimately put some downward pressure on prices."
"RFS, which is the Renewable Fuel Standard, will likely be reformed in 2014. There has been a ton of pressure from various constituents on the fuel standard. It's based on assumptions about gasoline demand that are outdated and we think that it will change."
Metals and Mining Analyst
"We've seen many management changes among mining companies over the last year and a half. Many of the top twenty mining companies have changed senior management. Where previous management was focused much more on growth at any cost, new management is focused on capital and cost management... in 2014 [we] are likely to continue to see this aggressive approach by new management on reducing costs."
"We see many opportunities in the Permian Basin, in West Texas, which is divided into two areas: the Midland eastern basin and the Delaware western basin. The Midland Basin is a bit more advanced than the Delaware basin but we have exposure to both regions."
"There's been a big paradigm shift in the mining sector over the last year, and we are seeing high-level management changes that reflect this. The industry is shifting from a focus on growth, to one that emphasizes expense reduction, margins, returns, and eventually getting to higher valuations.”
“Hard assets” refers to
the natural resources or commodities that are mined, exploited, harvested or
otherwise procured globally.
Hard assets have traditionally been
grouped into five broad categories:
Oil, natural gas, electricity, coal, and new/renewable alternative energy
2) Precious Metals Gold, silver,
palladium and platinum
3) Base/Industrial Metals Copper, aluminum, steel, iron and nickel
Agriculture Corn, wheat, sugar and water
Forest Products Timber, pulp and paper
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 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 1.38% for Class A, 2.20% for Class C, 1.00% for Class I, and 1.13% 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.
Van 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 1.38% for Class A, 2.20% for Class C,
1.00% for Class I, and 1.13% 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 S&P® North American Natural Resources Sector Index (SPGINRTR) includes mining, energy, paper and forest products, and plantation-owning companies. The S&P® 500 Index consists of 500 widely held common stocks covering industrial, utility, financial and transportation sectors. The S&P® Goldman Sachs Commodity Total Return Index (SPGSCITR) is a composite index of commodity sector returns, representing an unleveraged, long-only investment in commodity futures. All indices are unmanaged and include the reinvestment of all dividends, but do not reflect the payment of transaction costs, advisory fees or expenses that are associated with an investment in the Fund. An index’s performance is not illustrative of the Fund’s performance. Indices are not securities in which investments can be made.
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 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.
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.
Not FDIC Insured — No Bank Guarantee — May Lose Value
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