Natural Resources and Commodities
Despite short-term fluctuations, the long-term rationale for investing in natural resource equities and commodities remains intact, benefitting investors as a tool to help enhance portfolio diversification, as a means to gain direct access to global growth and as a hedge to offset the impact of inflationary pressures.
The VanEck Approach
The Global Hard Assets Strategy, an actively managed, equity-focused strategy, offers diversified natural resource exposure through a portfolio of companies operating in the gold and precious metals, base and industrial metals, agriculture, timber, oil, gas and renewable energy markets.
- The strategy’s sector and company exposure are meaningfully adjusted to adapt to underlying shifts in global fundamentals or developing industry themes, such as sustainable resource development and operational efficiency advancement.
The passively managed Constant Maturity Commodity Index (CMCI) Strategy addresses the deficiencies inherent with many popular commodity index funds.
- By spreading its exposure across a range of maturities and maintaining a constant maturity, CMCI seeks to mitigate the impact of negative roll yield and isolates “pure” commodities exposure.
While the familiar themes of investing in natural resources and commodities are under pressure, many positive aspects of the future outlook remain.
- The massive, coordinated global monetary and fiscal stimulus is likely to impact global demand beyond the extent of the current virus. If this provides a catalyst to stabilize the supply/demand imbalance in place today, commodity prices could quickly rebound to near pre-crisis levels.
- Many of the companies and industries have spent the last several years restructuring their business models and strategy. As a result, they entered this crisis with secure balance sheets, lower operating costs, and improving returns on/of capital (i.e., dividends and share repurchases) and thus are positioned to weather the current environment.
- While the unprecedented demand shock is hitting all commodities, consumption and prices of agricultural goods, gold and alternative energy assets are expected to be more resilient over the near term.
VanEck pioneered commodity-equity investing with the nation’s first gold equity strategy in 1968 and reaffirmed its leadership when it was among the first to provide investors an actively managed portfolio of diversified natural resource equities in 1994.
Today, our capabilities span actively and passively managed strategies, from physical commodities to natural resource equities. We offer specialized exposure to individual sectors and diversified solutions with broad exposure across sectors and industries.