VanEck has announced the launch of the VanEck Vectors Real Asset Allocation exchange-traded fund (ETF), a fund that seeks long-term total return from exposure to a range of real assets, including commodities and companies involved in natural resources, real estate, and infrastructure, while mitigating downside risk.
“VanEck has been a long-time proponent of the benefits of real asset investments, both from a performance and portfolio diversification perspective. We also understand that the volatility of real asset investing is a challenge for many investors,” says David Schassler, portfolio manager for RAAX. “These are predominantly cyclical sectors that experience frequent periods of high volatility. RAAX was specifically designed to address this. It is a real asset investment solution with built in risk management.”
RAAX is designed to provide exposure to real assets while seeking to minimize the impact of drawdowns. Real assets can potentially help investors combat rising inflation, enhance portfolio diversification, and participate in global growth. The new fund uses a rules-based model to allocate among approximately 12 exchange-traded products (ETPs) and has the ability to allocate up to 100% to cash and cash equivalents in the event of market stress. The ETPs provide exposure to agribusiness, coal, infrastructure, real estate, steel, oil services, unconventional oil & gas, and gold mining companies as well as diversified commodity futures exposure and physical gold.
“RAAX is the type of solution-oriented ETF our investors expect from us” says Ed Lopez, head of ETF Product at VanEck. “Its innovative allocation and risk-management methodology is indicative of VanEck’s commitment to offering forward-thinking investment solutions.”
VanEck also notes that real asset investments are not without their risks, which can include susceptibility to adverse economic events, natural disasters, geopolitical risks, and supply and demand disruptions. RAAX performance is dependent on the performance of underlying funds and is subject to the risks of the underlying funds’ investments.
The Fund is the latest addition to the VanEck Vectors suite of Guided Allocation funds, which includes an ETF, VanEck Vectors NDR CMG Long/Flat Allocation ETF, and a mutual fund, VanEck NDR Managed Allocation Fund (NDRMX).
BlackRock Announces Approach to Firearm Manufacturers
The recent tragedy in Florida has driven home for BlackRock the terrible toll from gun violence in America. It has put a spotlight on the role of companies that manufacture and distribute civilian firearms. Many of these companies are privately owned, but some of the largest manufacturers and retailers are publicly listed companies and are therefore held in the portfolios of millions of individual and institutional investors around the world.
In a statement BlackRock says it holds no firearms manufacturers in its active equity portfolios (where stocks are selected by portfolio managers within guidelines agreed to by clients). In BlackRock’s index equity products (where stocks are determined by third-party index providers) – firearms manufacturers represent 0.01% of total assets.
Because the companies in an index are determined by third-party index providers, when a client chooses an index that includes a firearms manufacturer, BlackRock is unable to sell those shares regardless of their view of the company. Within those constraints, the company says BlackRock addresses the issue of firearms manufacturers in index portfolios in two ways: Offering clients a choice of products that exclude firearms manufacturers and/or retailers if clients choose to do so and; engaging with firearms manufacturers and retailers in which clients are invested regarding business policies and practices as described in the statement.
BlackRock manages money for a diverse set of investors, including pension plans, insurers and individual investors, who have a broad set of views on firearms. Over the past several weeks, the company says it has reached out to clients to help them understand their exposure to civilian firearms companies. According to the company, BlackRock strives “for a continuous dialogue with many clients and are helping them explore their options for altering or eliminating their firearms exposures.”
More information on BlackRock’s initiative can be found here.