Play the Inflation TradeVanEckJune 02, 2021
For a discussion between CEO Jan van Eck, Portfolio Manager Shawn Reynolds and Deputy Portfolio Manager Charlie Cameron about our commodities outlook and the inflation trade, watch this webinar replay: Navigating the Markets: Inflation and the Risks to Goldilocks. The chart pack can be downloaded here.
As 2021 has taken shape, for many, the inflation debate has seemingly shifted from “how much” to “how long”. More recently, there have been a number of factors pointing towards inflation as a potential protracted risk to investors. Consideration of this risk is clearly being reflected in the price trends of natural resources and commodities, which historically have been a leading indicator of inflation as they sit at the intersections of supply/demand and consumer/producer.
The historic fiscal and monetary policy response to the COVID-19 crisis has reignited the urgency of inflation discussions as the global economy reopened. Meanwhile, commodity and resource supply has been constrained from the sharp drop in capital investment over the last several years. In simplified terms, there is more money in the system, increased government and consumer spending, and rising prices through consumption. Plus, with less supply of materials, higher input costs are felt by producers, and these end up being passed on at the register in the form of rising prices. These trends, along with increased manufacturing activity and the possibility of wage inflation, establish a sturdy price floor, thus contributing to a potential prolonged inflationary cycle.
Historically, natural resources and commodities broadly have acted as a viable hedge to inflation. More specifically, we believe companies in this areas, particularly within energy, industrials metals and gold, have healthy balance sheets, attractive valuations and the ability to generate significant free cash. Many companies also exhibit what we view as fascinating longer term growth profiles as direct inputs and beneficiaries of the resource transition movement fueled by technological advances and sustainability.
VanEck Inflation Sensitive Solutions
VanEck has a history of inflation sensitive investing in natural resources and commodities for over 50 years, offering investors 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.
Name Symbol Gold/
Traditional Energy Alternative Energy Base Metals Agri-
Rare Earth Metals
REITs Global Resources Fund GHAAX ■ ■ ■ ■ ■ ■ CM Commodity Index Fund CMCAX ■ ■ ■ ■ International Investors Gold Fund INIVX ■ Oil Refiners ETF CRAK ■ Energy Income ETF EINC ■ ■ Unconventional Oil & Gas ETF FRAK ■ Gold Miners ETF GDX ■ Junior Gold Miners ETF GDXJ ■ Natural Resources ETF HAP ■ ■ ■ ■ ■ ■ Agribusiness ETF MOO ■ Uranium+Nuclear Energy ETF NLR ■ ■ Oil Services ETF OIH ■ VanEck Merk Gold Trust OUNZ ■ Inflation Allocation ETF RAAX ■ ■ ■ ■ ■ ■ ■ ■ Rare Earth/Strategic Metals ETF REMX ■ Steel ETF SLX ■ Low Carbon Energy ETF SMOG ■
More information including recent performance and current holdings can be found by clicking the fund names below:
Actively-managed approach to companies with unique competitive advantages associated with traditional commodities and those leading the development of emerging resource applications and technologies.
Proven fundamental, bottom-up process emphasizes stock selection based on industry experience to access opportunities across the gold mining sector.
A passively managed fund that offers diversified commodities exposure by spreading its exposure across multiple maturities and maintaining a constant maturity per commodity to mitigate the impact of negative roll yield.
Provides exposure to an industry that may generally benefit from lower oil prices, a segment that has historically interacted differently with oil prices and market dynamics than other energy segments.
Offers exposure to MLPs and energy infrastructure companies that have historically exhibited attractive yield characteristics without burdensome K-1 tax reporting.
Provides access to the unconventional oil and gas industry, an industry that has experienced rapid growth and transformative technology advancements.
The nation's first ETF that offers direct exposure to the gold mining industry, which may provide leverage to rising gold prices.
Access to junior gold miners, including smaller exploratory or early development phase companies that are responsible for many gold reserve discoveries worldwide.
Offers exposure to global companies involved in six natural resources segments (including agriculture, energy, metals and renewable energy).
Positioned to meet growing demand as global population growth is driving increasing food demand and the need for efficient agricultural solutions.
Access to an important segment of the nuclear energy market, which is a significant clean energy source at an inflection point from increasing demand.
Invests in highly liquid companies in oil services industry, including both domestic and U.S. listed foreign companies allowing for enhanced industry representation.
Provides investors with a convenient and cost-efficient way to invest in gold through shares with the option to take physical delivery.
Comprehensive allocation strategy that invests across real assets and seeks to reduce volatility by responding to changing market environments.
Provides access to the rare earth or strategic metals industry, which supplies key inputs to many of the world’s most advanced technologies.
Access to the steel industry, an industry supporting global industrialization and economic expansion.
Exposure to low carbon energy that includes not only solar, wind and hydro companies, but also in more recently developing areas of the market such as electric vehicles, battery tech, hydrogen and fuel cells.
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Please see the prospectus and summary prospectus of each fund for more complete information regarding its specific risks. You can lose money by investing in the Funds. Any investment in the Funds should be part of an overall investment program, not a complete program. Diversification does not assure a profit or protect against loss.
CM Commodity Index Fund is subject to the risks associated with its investments in commodity linked derivatives, risks of investing in a wholly owned subsidiary, risk of tracking error, risks of aggressive investment techniques, leverage risk, derivatives risks, counterparty risks, non-diversification risk, credit risk, concentration risk, and market risk. The use of leverage may magnify losses. Please see the prospectus and summary prospectus for information on these and other risk considerations.
Global Resources 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 derivative, commodity-linked instruments, and illiquid securities. The Fund is also subject to inflation risk, market risk, non-diversification risk, and leverage risk.
International Investors Gold Fund is subject to the risks associated with concentrating its assets in the gold industry, which can be significantly affected by international economic, monetary and political developments. The Fund’s overall portfolio may decline in value due to developments specific to the gold industry. 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 derivatives, commodity-linked instruments, illiquid securities, and small- or mid-cap companies. The Fund is also subject to inflation risk, market risk, non-diversification risk, leverage risk, and risks of investments in a wholly owned subsidiary.
Principal VanEck Vectors Equity ETF Risk Factors include sector, market, economic, political, foreign currency, world event and index tracking risks. Additional risks include fluctuations in net asset value as well as the risks associated with investing in non-diversified portfolios made up of companies with medium- and small-capitalizations and with limited operating histories.
VanEck Merk® Gold Trust: This material must be preceded or accompanied by a prospectus for the VanEck Merk Gold Trust (the “Trust"). Before investing, you should carefully consider the Trust’s investment objectives, risks, charges and expenses. This and other information is in the prospectus, a copy of which may be obtained by visiting vaneck.com/ounz or calling 800.826.2333. Please read the prospectus carefully before you invest. Investing involves risk, including possible loss of principal. The Trust is not an investment company registered under the Investment Company Act of 1940 or a commodity pool for the purposes of the Commodity Exchange Act. Shares of the Trust are not subject to the same regulatory requirements as mutual funds. Because shares of the Trust are intended to reflect the price of the gold held in the Trust, the market price of the shares is subject to fluctuations similar to those affecting gold prices. Additionally, shares of the Trust are bought and sold at market price, not at net asset value (“NAV”). Brokerage commissions will reduce returns. The sponsor of the VanEck Merk Gold Trust is Merk Investments LLC (the “Sponsor”). Van Eck Securities Corporation and Foreside Fund Services, LLC, provide marketing services to the Trust.
The request for redemption of shares for gold is subject to a number of risks including but not limited to the potential for the price of gold to decline during the time between the submission of the request and delivery. Delivery may take a considerable amount of time depending on your location.