Many investors have never experienced the destructive portfolio impact that high inflation can inflict. Investors last faced inflation risk in the early-to-mid 2000s, with the most notable bout of inflation occurring in the 1970s. Over the last several months, the inflation debate has evolved from whether there would be any inflation at all to how high and how long it will last. As a result, the need for investors to reconsider their portfolio exposures has taken on even more importance.
In the upcoming webcast, Real Inflation Risk Requires Real Assets, David Schassler, portfolio manager and head of quantitative investment solutions at VanEck, will examine current inflation drivers and look at ways to adapt allocations, using real assets, including gold, commodities, and natural resources equities.
To help investors gain exposure to real assets, the VanEck Inflation Allocation ETF (RAAX) is an actively managed fund of funds that seeks to maximize long-term real returns. It invests in ETPs with exposure to real assets, such as real estate, commodities, natural resources, or infrastructure, and may hold up to 100% cash or equivalents.
With higher inflation, real assets have finally awoken from their decade-plus hibernation, and most are leading the markets higher. The lost decade-plus in commodities has created a situation where, relative to stocks, the prices of commodities and natural resource equities may still be cheap and have a lot more room to run.
Additionally, RAAX now has exposure to bitcoin. There was an initial investment of 2% into the Grayscale Bitcoin Trust. Digital assets may offer RAAX many of the same benefits as gold. Most notably, protection against inflation and currency debasement in addition to overall portfolio diversification.
The VanEck Merk Gold Trust (OUNZ) is one way to gain exposure to physical gold. OUNZ was the first U.S.-listed ETF to offer actual delivery of physical bullion when an investor sells shares in the fund.
The Merck Gold Trust is also emerging as a gold ETF with socially responsible and sustainability characteristics at a time when those investment styles are sweeping over the equity-based funds landscape. The underlying London Bars are subject to a responsible sourcing program, which follows the five-step due diligence framework set out in the OECD guidance and requires good delivery refiners to demonstrate their efforts to combat money laundering, terrorist financing, and human rights abuses, and respect the environment globally.
The VanEck Vectors Gold Miners ETF (GDX), the oldest and largest exchange traded fund dedicated to gold miners stocks, and the VanEck Vectors Gold Miners ETF (NYSEArca: GDXJ) can help investors gain exposure through the equity side, as both ETFs target the producers that mine or extract gold bullion from the ground.
Additionally, the VanEck Vectors Natural Resources ETF (HAP) is a broad play for the rising demand for raw materials across the globe. HAP seeks to replicate as closely as possible the price and yield performance of the VanEck Natural Resources Index, which is comprised of publicly traded companies deriving greater than 50% of their revenues from the production and distribution of commodities and commodity-related products and services in the following sectors: agriculture, alternatives (water & alternative energy), base and industrial metals, energy, forest products, precious metals.
Financial advisors who are interested in learning more about real assets can register for the Wednesday, December 1 webcast here.