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Welcome to VanEck
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The VanEck Vectors® Real Asset Allocation ETF (RAAX™) uses a data-driven, rules-based process that leverages over 50 indicators (technical, macroeconomic and fundamental, commodity price, and sentiment) to allocate across 12 individual real asset segments in five broad real asset sectors. These objective indicators identify the segments with positive expected returns. Then, using correlation and volatility, an optimization process determines the weight to these segments with the goal of creating a portfolio with maximum diversification while reducing risk. The expanded PDF version of this commentary can be downloaded here.
With escalating near-term risks in many real assets, RAAX allocated defensively by raising cash for the first time since its launch.
|Average Annual Total Returns (%) as of August 31, 2018|
|1 Mo†||YTD†||1 Year||Life
|RAAX (Share Price)||-1.01||-||-||1.27|
|Blended Real Asset Index*||-1.11||-||-||1.41|
|Average Annual Total Returns (%) as of June 30, 2018|
|1 Mo†||YTD†||1 Year||Life
|RAAX (Share Price)||-1.15||-||-||2.46|
|Blended Real Asset Index*||-1.08||-||-||2.45|
The table presents past performance which is no guarantee of future results and which may be lower or higher than current performance. Returns reflect temporary contractual fee waivers and/or expense reimbursements. Had the ETF incurred all expenses and fees, investment returns would have been reduced. Investment returns and ETF share values will fluctuate so that investors' shares, when redeemed, may be worth more or less than their original cost. ETF returns assume that distributions have been reinvested in the Fund at NAV.
†Returns less than a year are not annualized.
Expenses: Gross 0.81%; Net 0.74%. Expenses are capped contractually at 0.55% through February 1, 2020. Expenses are based on estimated amounts for the current fiscal year. Cap exclude certain expenses, such as interest, acquired fund fees and expenses, and trading expenses.
RAAX benefited from avoiding many of the poorer performing assets that plagued real assets investors, and also from its portfolio weighting methodology, which seeks to minimize volatility. In August, RAAX had no exposure to gold equities, global metals and mining, coal equities, and oil services equities. The average return of these asset classes was a dismal -7.5% last month.
RAAX’s model rapidly adjusts to the rising risks of the changing environment. In September, RAAX added a 33% exposure to U.S. Treasury bills, removed its positions in gold bullion and diversified commodities, decreased agribusiness exposure from 20% to 7%, and added a 5% weighting to oil services equities.
RAAX offers a risk-managed approach to real asset investing. It seeks to address key volatility considerations in each step of its process by evaluating: first, what asset classes to invest in; second, when to get defensive by transitioning to cash; and lastly, how much to allocate among asset classes. Decisions are made on a monthly basis using our rules-based, quantitative allocation process with the responsiveness to quickly adapt to changing market conditions.
RAAX only invests in asset classes that the model is bullish on, and the weightings themselves are not an indication of conviction but are instead determined by RAAX’s optimization process that seeks to maximize diversification and minimize volatility.
|Real Asset Segment||View||Rationale|
|Agribusiness Equities||Bullish||Bullish equity price trends; bearish commodity price trend; ordinary volatility; bullish economic factors.|
|Coal Equities||Bearish||Bearish equity & commodity price trends; ordinary volatility; bearish economic factors.|
|Global Infrastructure||Bullish||Bullish price trends; ordinary volatility.|
|Gold Bullion||Bearish||Bearish commodity price trends, ordinary volatility, and extreme sentiment.|
|Gold Equities||Bearish||Bearish equity and commodity price trends, ordinary volatility, and sentiment is not extreme.|
|Diversified Commodities||Bearish||Bearish price trends; ordinary volatility.|
|MLPs||Bullish||Bullish price trends; ordinary volatility; bullish economic factors; bullish credit spread reading.|
|Oil Services Equities||Bullish||Bearish equity & mixed commodity price trends, and mixed sentiment signals; Economic factors remain bullish. Ordinary volatility.|
|Unconventional Oil & Gas Equities||Bullish||Bearish equity & mixed commodity price trends, and mixed sentiment signals; Economic factors remain bullish. Ordinary volatility.|
|Global Metal & Mining Equities||Bearish||Bearish equity and commodity price trends, and bearish economic factors; ordinary volatility.|
|Steel Equities||Bullish||Bearish equity price trends; bullish commodity price trend; ordinary volatility.|
|REITs||Bullish||Bullish equity price trends and economic factors; bearish economic factors; ordinary volatility, bullish credit spread reading.|
Source: VanEck. As of September 2018.
RAAX is responding to increasing risks, including heightened pressure from potential trade tariffs, by favoring assets with less sensitivity to commodity prices. In September, RAAX added a 33% allocation to U.S. Treasury bills. Should the number of bearish segments continue to increase, RAAX has the ability to expand its cash position and allocate up to 100% in cash to avoid a pervasive market drawdown. Positions in gold bullion and diversified commodities were removed, agribusiness equities were reduced from 20% to 7%, and a 5% allocation was added to oil services equities.
Real Asset Sector and Asset Class Weights
Source: VanEck. As of September 4, 2018.
Monthly Asset Class Changes
|Real Asset Segment||Sep-18||Aug-18||Change from Previous Month|
|Oil Service Equities||5%||0%||5%||New Position|
|Global Infrastructure||20%||20%||0%||No Change|
|Gold Equities||0%||0%||0%||No Change|
|Unconventional Oil & Gas Equities||5%||5%||0%||No Change|
|Master Limited Partnerships||5%||5%||0%||No Change|
|Steel Equities||5%||5%||0%||No Change|
|Coal Equities||0%||0%||0%||No Change|
|Global Metals & Mining Equities||0%||0%||0%||No Change|
Source: VanEck. As of September 4, 2018. Past performance is not indicative of future results.
Please note that the information herein represents the opinion of the author, but not necessarily those of VanEck, and these opinions may change at any time and from time to time. Non-VanEck proprietary information contained herein has been obtained from sources believed to be reliable, but not guaranteed. Not intended to be a forecast of future events, a guarantee of future results or investment advice. Historical performance is not indicative of future results. Current data may differ from data quoted. Any graphs shown herein are for illustrative purposes only. No part of this material may be reproduced in any form, or referred to in any other publication, without express written permission of VanEck.
This content is published in the United States for residents of specified countries. Investors are subject to securities and tax regulations within their applicable jurisdictions that are not addressed on this content. Nothing in this content should be considered a solicitation to buy or an offer to sell shares of any investment in any jurisdiction where the offer or solicitation would be unlawful under the securities laws of such jurisdiction, nor is it intended as investment, tax, financial, or legal advice. Investors should seek such professional advice for their particular situation and jurisdiction.
The Blended Real Assets Index consists of an equally weighted blend of the returns of Bloomberg Commodity Index, S&P Real Assets Equity Index, and VanEck® Natural Resources Index. Equal weightings are reset monthly. The S&P Real Assets Equity Index measures the performance of equity real return strategies that invest in listed global property, infrastructure, natural resources, and timber and forestry companies. The VanEck Natural Resources Index is a rules-based index intended to give investors a means of tracking the overall performance of a global universe of listed companies engaged in the production and distribution of commodities and commodity-related products and services. Sector weights are set annually based on estimates of global natural resources consumption, and stock weights within sectors are based on market capitalization, float-adjusted and modified to conform to various asset diversification requirements. The S&P 500® Index (S&P 500) consists of 500 widely held common stocks, covering four broad sectors (industrials, utilities, financial and transportation).
The S&P Real Assets Equity Index is a product of S&P Dow Jones Indices LLC and/or its affiliates and has been licensed for use by Van Eck Associates Corporation. Copyright © 2018 S&P Dow Jones Indices LLC, a division of S&P Global, Inc., and/or its affiliates. All rights reserved. Redistribution or reproduction in whole or in part are prohibited without written permission of S&P Dow Jones Indices LLC. For more information on any of S&P Dow Jones Indices LLC’s indices please visit www.spdji.com. S&P® is a registered trademark of S&P Global and Dow Jones® is a registered trademark of Dow Jones Trademark Holdings LLC. Neither S&P Dow Jones Indices LLC, Dow Jones Trademark Holdings LLC, their affiliates nor their third party licensors make any representation or warranty, express or implied, as to the ability of any index to accurately represent the asset class or market sector that it purports to represent and neither S&P Dow Jones Indices LLC, Dow Jones Trademark Holdings LLC, their affiliates nor their third party licensors shall have any liability for any errors, omissions, or interruptions of any index or the data included therein.
Any indices listed are unmanaged indices 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. Certain indices may take into account withholding taxes. An index’s performance is not illustrative of the Fund’s performance. Indices are not securities in which investments can be made.
An investment in the Fund may be subject to risks which include, among others, fund of funds risk which may subject the Fund to investing in commodities, gold, natural resources companies, MLPs, real estate sector, infrastructure, equities securities, small- and medium-capitalization companies, foreign securities, emerging market issuers, foreign currency, credit, high yield securities, interest rate, call and concentration risks, all of which may adversely affect the Fund. The Fund may also be subject to affiliated fund, U.S. Treasury Bills, subsidiary investment, commodity regulatory, tax, liquidity, gap, cash transactions, high portfolio turnover, model and data, management, operational, authorized participant concentration, absence of prior active market, trading issues, market, fund shares trading, premium/discount and liquidity of fund shares, and non-diversified risks. The Fund's assets may be concentrated in a particular sector and may be subject to more risk than investments in a diverse group of sectors.
Diversification does not assure a profit or protect against a loss.
Fund shares are not individually redeemable and will be issued and redeemed at their net asset value (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. 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.
Investing involves substantial risk and high volatility, including possible loss of principal. Bonds and bond funds will decrease in value as interest rates rise. An investor should consider the investment objective, risks, charges and expenses of the Fund carefully before investing. To obtain a prospectus and summary prospectus, which contain this and other information, call 800.826.2333 or visit vaneck.com. Please read the prospectus and summary prospectus carefully before investing.
This website is published in the United States for residents of specified countries. Investors are subject to securities and tax regulations within their applicable jurisdictions that are not addressed on this website. Nothing on this website should be considered a solicitation to buy or an offer to sell shares of any investment in any jurisdiction where the offer or solicitation would be unlawful under the securities laws of such jurisdiction, nor is it intended as investment, tax, financial, or legal advice. Investors should seek such professional advice for their particular situation and jurisdiction.
Investing involves risk, including possible loss of principal. An investor should carefully consider investment objectives, risks, charges and expenses carefully before investing. This and other information can be found in the appropriate regulatory documents made available for a specified country as designated in this website.