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  • Guided Allocation

    Still Bullish Despite Recent Volatility

    David Schassler ,Portfolio Manager
    July 30, 2018
     

    June Performance Summary

    The VanEck Vectors Real Asset Allocation ETF (RAAX) returned -1.80% in June. RAAX was fully invested across commodities, natural resource equities, and MLPs. The largest real investments were in natural resource equities (38%), diversified commodities (30%), gold bullion and gold equities (27%), and MLPs (5%).

    RAAX offers a risk managed approach to real asset investing. It uses a data-driven, rules-based process that leverages over 50 technical, macroeconomic and fundamental, commodity price, and sentiment indicators to allocate among 12 real asset segments. The Fund helps investors with the what, when, and how of real asset investing. This includes: (1) what to own; (2) when to be invested; and (3) how to allocate. Decisions are made on a monthly basis using our repeatable process.

    Key Takeaways

    • Our indicators remain bullish on most real assets. In aggregate, technical, commodity price, sentiment, and macroeconomic/fundamental indicators are supportive of higher prices.
    • Many real asset sectors experienced a pullback in June. The catalysts for the selloff included rising interest rates in the U.S., the strengthening U.S. dollar, and concerns about the potential impacts of an escalation in trade tariffs.
    Real Asset Segment View Rationale
    Agribusiness Equities Bullish Bullish equity price trend; bearish commodity price trend; ordinary equity volatility; bullish economic factors.
    Coal Equities Bullish Bullish equity & commodity price trend; ordinary equity volatility; bearish economic factors. Bearish equity price trend turned bullish leading composite to flip.
    Global Infrastructure Bearish Bearish price trends; ordinary equity volatility.  No change in indicators or composite.
    Gold Bullion Bullish Bullish price trend (last month) turned bearish but composite still bullish. Large allocation due to diversification benefits.
    Gold Equities Bearish Bearish equity and commodity price trends. Bullish price trends in the commodity (last month) turned bearish leading composite to flip to bearish.
    Diversified Commodities Bullish Bullish price trends; ordinary equity volatility. Large allocation due to diversification benefits.
    MLPs Bullish Bullish price trends; ordinary equity volatility; bullish economic factors; bearish credit spread reading. Bullish credit spread reading (last month) turned bearish.
    Oil Services Equities Bullish Bullish equity & commodity price trends. Mixed commodities trend (last month) turned bullish and mixed sentiment readings turned bearish.
    Unconventional Oil & Gas Equities Bullish Bullish price trends in the equities; mixed price trends in commodities; mixed sentiment readings (last month) turned bearish but composite still bullish.
    Global Metal & Mining Equities Bullish Bearish equity price trend; bullish on commodity price; ordinary equity volatility; bullish economic factors. Bullish equity price trend (last month) turned bearish.
    Steel Equities Bullish Bearish equity price trend; bullish commodity price trend. Bullish equity price trend (last month) turned bearish.
    REITs Bullish Bullish equity price trends and economic factors; bearish credit spread reading. Bearish equities price trend & economic readings (last month).

    Source: VanEck. As of June 30, 2018.

    July Positioning

    We remain bullish on most real assets. The Fund is fully invested across natural resource equities (33%), diversified commodities (22%), gold bullion (20%), REITs (20%), and MLPs (5%). This month we added a 20% allocation to REITs and a 5% allocation to coal equities. We removed our 5% allocation to gold equities and reduced our exposure from diversified commodities (30% to 22%) and agribusiness equities (18% to 8%).

    Real Asset Sector and Asset Class Weights

    Real Asset Sector and Asset Class Weights

    Source: VanEck. As of June 30, 2018.

    Monthly Asset Class Changes

    Real Asset Segment July-18 Jun-18 Change from Previous Month
    REITs 20% 0% 20% New Position
    Coal Equities 5% 0% 5% New Position
    Global Infrastructure 0% 0% 0% No Change
    Global Metals & Mining Equities 5% 5% 0% No Change
    Unconventional Oil & Gas Equities 5% 5% 0% No Change
    Oil Services Equities 5% 5% 0% No Change
    MLPs 5% 5% 0% No Change
    Steel Equities 5% 5% 0% No Change
    Gold Bullion 20% 20% 0% No Change
    Gold Equities 0% 7% -7% Decrease
    Diversified Commodities 22% 30% -8% Decrease
    Agribusiness Equities 8% 18% -10% Decrease

    Source: VanEck. Data as of June 30, 2018. Past performance is not indicative of future results.