ETF Trends publisher Tom Lydon discussed the VanEck Vectors Real Asset Allocation ETF (RAAX) on this week’s “ETF of the Week” podcast with Chuck Jaffe on the MoneyLife Show.
Real assets help investors diversify away from a traditional portfolio of stocks and bonds to better manage overall risk. They provide three key roles:
- a hedge to inflationary pressure
- As a leverage to global growth
- As a portfolio diversifier
A diversified approach that includes alternative assets can help minimize overall portfolio drawdowns with less volatility, compared to the S&P 500.
RAAX is actively managed: it starts off with exposure to commodities and companies involved in natural resources, real estate, MLPs and infrastructure. The managers then screens for indicators based on technical, commodity prices, investor sentiment and macroeconomic or fundamentals.
RAAX uses a data-driven, rules-based process leveraging approximately 60 technical, macroeconomic/fundamental, commodity price, and sentiment indicators to allocate among 12 real assets segments.
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