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Daily Price as of 04/18/19

$4.72 $0.00 / +0.0%

Class A Details: CMCAX

12/31/10 1.41%/0.95%

Commodity Commentary: Q4 2018

2018 was a volatile year for all markets and commodities were no exception. During the year several macroeconomic headwinds for global growth and commodity demand developed and pressured prices across all commodity sectors at different times. The U.S. Federal Reserve (Fed) raised rates four times, creating a positive environment for the U.S. dollar, which rallied sharply in the spring and remained strong, ending the year up 4% and up 9% from its February lows. The second headwind resulted from President Donald Trump’s aggressive trade policies, which added to global growth worries and were an additional support for the U.S. dollar. Lastly, global political tensions added to the uncertain economic environment. In Europe, Brexit, along with Italy’s election and budget problems, led to softer European growth. In the U.S., the Trump administration’s poor performance in the mid-term elections added to an uncertain environment.

During the first half of 2018, commodity sectors most directly affected by demand from China declined as the Trump administration both threatened and imposed trade tariffs. Corn and soybeans were directly impacted when, as expected, China retaliated with its own tariffs on U.S. imports. Soybeans fell 19% and corn fell 17%, making the U.S. farmer the first victim of the trade war. China is the world’s largest consumer of industrial metals, so copper prices declined over 20% as investors started to downgrade the outlook for China’s economy as the trade tensions persisted. Crude oil prices held and rallied on the continued rebalancing of supply and strong global consumption. Fears of U.S. sanctions on Iran, after the U.S. withdrawal from the Obama nuclear deal, added to the bullish sentiment. Commodity indices finished close to unchanged in the first half, supported by the positive performance of the energy sector.

During the third quarter, commodity markets remained range-bound with energy sector strength continuing to offset weakness in other sectors. WTI crude oil reached a new high in early October of $76.0 on speculative buying in front the Iranian sanctions. Two things happened, however, causing a sharp decline in the energy sector starting in early October and carrying through to yearend. First, the Trump administration used its influence over the Saudi Arabian government, asking them to increase oil production. Second, when the expected Iranian sanctions were imposed, almost all of its oil customers were granted exemptions. The result was a market caught long and wrong, WTI crude oil fell 40% from its October highs to close the year on lows. There was a sharp rise in natural gas prices in the fourth quarter on colder weather, but it was short lived and reversed by yearend. Commodity indices finished the year on lows, down about 10%.

As we look ahead to 2019, the supply fundamentals look positive for commodity prices, but the uncertain global growth outlook hangs over the market as investors question the demand environment. There are reasons for hope for a better 2019. First, the Fed may have finished normalizing U.S. interest rates; and, second, trade talks with China continue and should show some developments and, hopefully, progress by the current deadline for U.S. tariff increases on March 1. If investors believe the Fed is done tightening, the U.S. dollar should decline, creating a better outlook for emerging markets economies and commodity demand. In addition, any improvement in the China trade environment could lead to a sharp recovery in the China-sensitive sectors – U.S. grains and industrial metals.

View CMCI Performance Table

Methodology of the Fund's Underlying Index: CMCI

Methodology of the Fund's Underlying Index: CMCI

UBS Bloomberg CMCI Highlights

  • Diversified across 29 commodities and five maturities

  • Potential for higher risk-adjusted returns than traditional commodity indices

  • Constant maturity approach: daily rolling of a small proportion of underlying futures

  • Monthly rebalancing: limited concentration risk in any one underlying commodity

The UBS Bloomberg Constant Maturity Commodity Index ("CMCI") diversifies across 29 commodity components and up to five maturities. The CMCI chooses between maturities of five “constant maturities”: three-month and six-month and one-, two- and three-year maturities for certain commodities. This can be done either selectively for individual commodities to diversify over time, or collectively for all those included in the index to diversify both across commodities and over time. In periods of persistent contango, this allows the index to place its exposure at more favorable (i.e., less sloping) sections of the futures curve and keep it there. This can prevent slippage into the steeper part of the curve, or the portion of the curve typically associated with higher roll losses.

Key Investment Terms

Key Investment Terms


"Contango" refers to an upward sloping term structure, in which indices that hold front-month contracts will incur a cost each time contracts expire and must be rolled to more expensive, longer-dated contracts. As contracts move closer to expiration, their value converges with spot prices. So, “contango cost” usually is measured by the difference between spot prices and front-month futures. 



"Backwardation" is the opposite of contango, and refers to a downward sloping term structure. Backwardation tends to occur in contracts and during periods when traders are concerned about scarcity of supplies. Thus, traders would rather have commodities in-hand now (spot) than in the future, and will pay for the privilege.



"Roll Yield" refers to the positive or negative contribution caused by rolling an expiring contract.



Video Viewpoint on Commodity Futures Concepts

Commodities: Exploring a Constant Maturity Approach

Roland Morris
Portfolio Manager

Commodity Strategist Roland Morris explains the constant maturity concept that underlies the VanEck CM Commoditiy Index Fund and how it invests in commodities. He also shares insights on where the market is in the current commodity cycle.

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Market Dynamics and Capital Allocation Drive Metals Outlook

Charl Malan
Senior Analyst

Senior Analyst Charl Malan discusses key drivers behind global demand for certain industrial metals as well as challenges in sustaining supply and the impact these dynamics have on the outlook for this space over the next few years.

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Natural Resource Companies Focus on Returns in 2018

Jan van Eck and Shawn Reynolds
CEO and Portfolio Manager

Jan van Eck, CEO, and Shawn Reynolds, Portfolio Manager, discuss their outlook for commodities and natural resource equities in 2018. Macro tailwinds help the outlook for commodities and companies have restructured to focus on returns.

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Global Conditions Align to Support Commodities in 2018

Roland Morris
Portfolio Manager

Portfolio Manager Roland Morris explores the impact of inflation, global growth, and the rebalancing of supplies on the commodities market in his outlook for 2018.

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What is Contango, Backwardation, and Roll Yield?

Roland Morris
Commodities Strategist

"There are three drivers of returns : the return on collateral or unused cash, the appreciation of the underlying commodities, and roll yield."

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Using the Constant Maturity Approach to Commodities

Roland Morris
Commodities Strategist

"Amongst the three drivers: commodity exposure, roll exposure, and collateral exposure, CMCAX does a great job of isolating commodity exposure. It does that through its constant maturity approach to reduce the roll risk, does not take collateral risk, and maintains a very short-term Treasury bill-holding which essentially eliminates collateral risk."

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Important Disclosure 

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 shares are issued to you pursuant to the automatic investment of income dividends or capital gains distribution. It is the responsibility of the financial intermediary to ensure that the investor obtains the proper “breakpoint” discount. Class I and Class Y do not have an initial sales charge. See the prospectus for more information.

1 Van Eck Absolute Return Advisers 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 0.95% for Class A, 0.65% for Class I, and 0.70% for Class Y of the Fund’s average daily net assets per year until May 1, 2019. 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 UBS Bloomberg Constant Maturity Commodity Index (CMCI) is a Total Return rules-based composite benchmark index diversified across 29 commodity components from within five sectors, specifically energy, precious metals, industrial metals, agricultural and livestock. 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. The Bloomberg Barclays US Aggregate Bond (BbgBarc US Agg Bond) Index is composed of the mortgage-backed and asset-backed securities and government/credit bonds. 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.

UBS and Bloomberg own or exclusively license, solely or jointly as agreed between them, all proprietary rights with respect to the Index. In no way do UBS or Bloomberg sponsor or endorse, nor are they otherwise involved in the issuance and offering of the Fund, nor do either of them make any representation or warranty, express or implied, to the holders of the Fund or any member of the public regarding the advisability of investing in the Fund or commodities generally or in futures particularly, or as to results to be obtained from the use of the Index or from the Fund.

The views and opinions expressed are those of VanEck. 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. Commodities are assets that have tangible properties, such as oil, metals, and agriculture. Commodities and commodity-linked derivatives may be affected by overall market movements and other factors that affect the value of a particular industry or commodity, such as weather, disease, embargoes or political or regulatory developments. The value of a commodity-linked derivative is generally based on price movements of a commodity, a commodity futures contract, a commodity index or other economic variables based on the commodity markets. Derivatives use leverage, which may exaggerate a loss. The Fund is subject to the risks associated with its investments in credit, commodities and commodity-linked derivatives, commodities and commodity-linked derivatives tax, counterparty, debt securities, derivatives, index tracking and data, industry concentration, management, market, operational, regulatory, repurchase and reverse repurchase agreements, and subsidiary risks. The use of commodity-linked derivatives such as swaps, commodity-linked structured notes and futures entails substantial risks, including risk of loss of a significant portion of their principal value, lack of a secondary market, increased volatility, correlation, liquidity, interest-rate, valuation and tax risks. Gains and losses from speculative positions in derivatives may be much greater than the derivative’s cost. At any time, the risk of loss of any individual security held by the Fund could be significantly higher than 50% of the security’s value. Investment in commodity markets may not be suitable for all investors. The Fund’s investment in commodity-linked derivative instruments may subject the Fund to greater volatility than investment in traditional securities.

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.