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VanEck’s Guided Allocation Philosophy: Helping Investors With the Crucial In or Out Decision


ROLAND MORRIS: Hello, I’m Roland Morris, the firm’s Commodity Strategist. I’m here today with David Schassler, who heads up our PARS Group, our Portfolio and Risk Solutions Group. Today we’re here to discuss some new products we’ve developed for investors; we refer to them as Guided Allocation products. David, tell me some of the thoughts you have about these Guided Allocation products and what’s leading the charge into this area of investing.


DAVID SCHASSLER: Each fund, if you think about each fund independently, they share one common philosophy and that’s there’s certain periods when investors want to be invested, which is most of the time. But there’s certain periods when you don’t want to be invested. So each of these strategies helps investors with that most important decision, which is, do you want to be invested now or don’t you want to be? And when you don’t want to be invested, there are certain periods when it’s better not to be invested; during those periods we’ve found that cash is truly the only risk-off asset.


We identify those periods of time with objective data-driven indicators to remove the human emotion out of the process. So the whole idea is be invested most of the time, get paid a positive risk premium to hold those assets. And then there’s certain periods when you want to be really defensive. And during those periods we will own up to 100% cash in each of these products.


MORRIS: David, could you explain in brief, the three products that we’ve developed that are now available to investors?


SCHASSLER: So the first product is the VanEck NDR Managed Allocation Fund. This is a global tactical asset allocation fund that helps investors determine, do you want to be in stocks, bonds, or cash? The neutral allocation is 60% in stocks, 40% in bonds. And then we pivot up and down based off how much risk is in the market. The second product is a long/flat equity ETF. The ticker is LFEQ. I think of this as the S&P 5001with guardrails. So what it does is it looks at the risk of each of the 22 industries in the S&P 500, and says, “Is there a lot of risk in each of these industries from a technical perspective?” And if there is, it will scale up and into and out of cash, depending on the risk in the market. And the last one is the real asset allocation ETF. The ticker is RAAX. And that product is really designed to benefit from the upside benefits of real asset investing. We know that real assets have historically outperformed other asset classes during periods of rising inflation, during periods of strong global growth. This strategy tries to capture most of those upside benefits, but we’ve also found with investors that most of them just can’t tolerate the high volatility associated with real asset investing. So each step of the investment process for the real asset allocation ETF is literally designed to look at it and say, “Well, how do I reduce risk at each point in the process, while giving you the upside benefits?”


MORRIS: At the end of the day, though, all of these models are rules-based models. We don’t change them; it removes the emotion from investing as well.


SCHASSLER: That’s exactly the key. Each model is driven 100% from the model, there’s no discretionary overlay. That’s key. Human beings are notorious for doing the wrong thing at exactly the wrong time. That happens because when you’re in a big sustained drawdown, stress takes over, fear takes over. If you have a process that basically comes up with a game plan way ahead of it, before actually a negative event unfolds, then you’re way better off for it. So we find that an objective data-driven process successfully removes the human emotion out of the process and gives investors a better shot of generating excess performance.


MORRIS: In essence one of the things we have accomplished with these three products is to reduce the volatility inherent in all markets, and in particularly very volatile markets like the real asset sectors. It’s another way, in a sense, for investors, by keeping those profits through the cycle, they can actually compound their money in a slightly different way as opposed to a buy-and-hold strategy for long periods of time. This way they can keep their profits and compound in that fashion.


SCHASSLER: That’s exactly right.


MORRIS: Excellent. Interesting that we’ve moved into this area at VanEck. In some ways this is kind of a marriage of our fundamental investing, long-only investing heritage, particularly in emerging markets and global markets and natural resources. And we’re sort of marrying that with some of the stuff your group is doing in quantitative analysis. Is that another way to look at it?


SCHASSLER: I think that that’s right. Each idea that we put into these portfolios, these models, is based off a fundamental underpinning.


MORRIS: Wonderful. Well, I think this has been a very interesting discussion. I really enjoy some of these new products we’re developing. I think they’re going to be very important for investors, particularly as we enter a period where really asset prices are fair or overvalued in many sectors. And I think this risk-managed solution could be very important for investors.


SCHASSLER: Thank you, Roland.


MORRIS: Thank you for spending time with us today. For further information, please visit VanEck’s website, vaneck.com. There’s information about these Guided Allocation products as well as many other investment products that we provide to investors globally. Thank you.


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IMPORTANT DISCLOSURE


1S&P 500®Index consists of 500 widely held common stocks covering industrial, utility, financial and transportation sector; as an index, it is unmanaged and is not a security in which investments can be made.


The views and opinions expressed are those of the speaker and are current as of the video’s posting date. Video commentaries are general in nature and should not be construed as investment advice. Opinions are subject to change with market conditions. All performance information is historical and is not a guarantee of future results. For more information about VanEck Funds, VanEck Vectors ETFs or fund performance, visit vaneck.com. Any discussion of specific securities mentioned in the video commentaries is neither an offer to sell nor a solicitation to buy these securities. Fund holdings will vary. All indices mentioned are measures of common market sectors and performance. It is not possible to invest directly in an index. Information on holdings, performance and indices can be found at vaneck.com.


Please note that Van Eck Securities Corporation offers investment products that invest in the asset class(es) included in this video.


An investment in the VanEck Vectors®NDR CMG Long/Flat Allocation ETF (LFEQ®) is subject to risks associated with equity risk, index tracking risk, risk of investing in other funds, risk of U.S. Treasury bills, market risk, and concentration risk. The Fund is considered non-diversified and may be subject to greater risks than a diversified fund.


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.


You can lose money by investing in the VanEck NDR Managed Allocation Fund. Any investment in the Fund should be part of an overall investment program rather than a complete program. All mutual funds are subject to market risk, including possible loss of principal. Because the Fund is a "fund-of-funds," an investor will indirectly bear the principal risks of the exchange-traded products in which it invests, including but not limited to, risks associated with smaller companies, foreign securities, emerging markets, debt securities, commodities, and derivatives. The Fund will bear its share of the fees and expenses of the exchange-traded products. Consequently, an investment in the Fund entails more direct and indirect expenses than a direct investment in an exchange-traded product. Because the Fund invests in exchange-traded products, it is subject to additional risks that do not apply to conventional mutual funds, including the risks that the market price of an exchange-traded product's shares may be higher or lower than the value of its underlying assets, there may be a lack of liquidity in the shares of the exchange-traded product, or trading may be halted by the exchange on which they trade. Principal risks of investing in foreign securities include changes in currency rates, foreign taxation and differences in auditing and other financial standards. Debt securities may be subject to credit risk and interest rate risk. Investments in debt securities typically decrease in value when interest rates rise. Because Van Eck Associates Corporation relies heavily on third party quantitative models, the Fund is also subject to model and data risk. For a description of these and other risk considerations, please refer to the Fund’s prospectus and Summary Prospectus, which should be read carefully before you invest.


The Fund's benchmark index (60% MSCI ACWI/40% Bloomberg Barclays US Agg) is a blended index consisting of 60% MSCI All Country World Index (ACWI) and 40% Bloomberg Barclays US Aggregate Bond Index. The MSCI ACWI captures large and mid-cap representation across 23 Developed Markets (DM) and 23 Emerging Markets (EM) countries and covers approximately 85% of the global investable equity opportunity set. The MSCI benchmark is a Gross Return index which reinvests as much as possible of a company’s gross dividend distributions. The Bloomberg Barclays US Aggregate Bond Index is a broad based benchmark that measures the investment grade, U.S. dollar-denominated, fixed-rate taxable bond market. This includes Treasuries, government-related and corporate securities, mortgage-backed securities, asset-backed securities, and collateralized mortgage-backed securities.


An investment in the VanEck Vectors®Real Asset Allocation ETF 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.


The Blended Real Asset Index is calculated by VanEck and comprises 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.


Investing involves risk, including possible loss of principal. Bonds and bond funds will decrease in value as interest rates rise. An investor should consider investment objectives, risks, charges and expenses of the investment company carefully before investing.


No part of this material may be reproduced in any form, or referred to in any other publication, without express written permission of Van Eck Securities Corporation. © Van Eck Securities Corporation.


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