Jan van Eck, CEO, provides an update on his investment outlook for 2016. The rally in commodities has done more than provide an investment opportunity; it has also driven positive performance in a number of other asset classes. Commodities Stand Out.
https://youtube.com/watch?v=ve_FNl8AsJQ
TOM BUTCHER: Jan, commodities have seen a rebound in 2016. What’s your outlook for the rest of the year?
JAN VAN ECK: We’re very happy about the first quarter rebound. We do think commodities have bottomed and there are a couple of factors to consider. What we always stress, because I think it’s the most important thing for people to understand, is the supply response. We think there has always been a growing demand for commodities around the world, whether it’s energy, natural gas, oil, or metals, such as copper. What caused prices to fall was an oversupply situation, which we think has been corrected. We’re glad to see that demand has caught up with supply.
I think the way for investors to think about this current environment is to consider this as an opportunity if one takes a much longer term perspective. We investors tend to be very focused on the short term. Energy is now very low as a percent of the overall S&P 500® Index. At its peak it was close to 16% and it’s near 6% now. Taking a multi-decade perspective tells us that energy is relatively cheap right now. Similarly, if you look at gold shares over a longer period of time, you may see that while they’ve risen a great deal this year, they may still have much further to go because they fell so far.
My Message to Investors: This is a Great Opportunity
That is my number one message to investors: This is a great longer term opportunity. Don’t obsess about the correct entry point.
BUTCHER: But global growth has been slow, debt levels have been high, and some governments have actually resorted to negative rates.
VAN ECK: We’ve seen this year a real inflection point, as Japan brought some of its interest rates negative. The question is how do you get economic growth going? After the financial crisis in the U.S., we had the same response: zero interest rates to try to stimulate economic growth. I think central banks are now basically taking it to the next level, i.e., negative interest rates. Federal Reserve Chair Janet Yellen spoke about this in her recent testimony, and former Fed Chair Ben Bernanke has been speaking about negative interest rates as well.
Negative Interest Rates May Cause Investors to Disengage
We think negative rates can be dangerous. Rather than stimulating the economy, negative interest rates, I believe, can cause people to withdraw from participating. Think about it from an investor’s perspective. It is very worrisome when a bank will only give you 99 cents at the end of the year when you gave it a dollar in January. I think that can make people take less risk rather than engage in order to help stimulate growth.
Negative interest rates are fantastic for gold because gold doesn’t pay a coupon, unlike bonds or stocks that pay dividends. Gold always has to compete with other financial assets but if financial assets are costing you money in a negative interest rate environment, we see no reason not to own gold. We think that’s one of the reasons why gold has been rallying this year.
VAN ECK: China is the second largest economy in the world and we think that every investment committee needs to have a view on China. Our view has been that, while there are some growing pains, and the devaluation of the renminbi was a major event last year, there are no systemic risks [i.e., risks inherent to China’s entire economy, rather than a single segment of the economy].
One of the things that we love to talk about is new China versus old China. New China is characterized by the consumer-driven and healthcare sectors; old China is steel, coal, and heavy manufacturing. Old China is continuing to face profitability issues. Another matter that we’ve recently been discussing is the growth of China’s overall debt levels, which are particularly concentrated in old China. There is between $1 to $2 trillion of bad debt in China right now. China’s economy amounts to $10 trillion and its overall debt level is approximately $20 trillion. These are large numbers. However, not every bad debt goes to zero, but the bad debt is very concentrated in the old economy sectors.1
We don’t think that causes a systemic risk but it may cause lumpiness in the performance of some of China’s financial assets. Because various regions will be badly affected, people who have fixed income exposure to those regions will likely be badly impacted. There are likely to be some defaults. Still, we think it’s a good thing because it’s a healthy process.
What’s Changed in our Outlook Since January
BUTCHER: Jan, you described your outlook at the beginning of 2016. How has it changed since January?
VAN ECK: Several important things happened in the first quarter. First of all, we thought that credit was very cheap, meaning interest rates had risen on MLPs [master limited partnerships] and on high yield bonds, which were almost showing signs of distress. We also said that this represented a great investment opportunity. In fact, high yield has outperformed the U.S. equity market2. Right now, I think that high risk bonds are a little less appealing today than they were when we first started the year.
Commodities Q1 Rally Creates Positive Inflection Point
Additionally, I think the equity markets still have a lot of struggling to do because price-to-earnings ratios are very high. Earnings fell last year in the U.S. They should be recovering now, looking forward over the next 12 months. Part of the reason is the strong U.S. dollar. Overall, we think equities are so-so and the U.S. economy, as well as the global economy, will muddle along.
Commodities were the big story in the first quarter. They dragged up other asset classes. For example, they helped emerging markets debt; they’ve helped Latin America. A good amount of high yield U.S. debt was energy-related, and it has rallied tremendously. It is interesting that what can be characterized as a bottom-up phenomenon of supply cuts kicking in within the commodities sector has helped other asset classes from a macro perspective.
Overall, we believe that commodities are the standout from a multi-year view. This is a great time for investors to look at them, given that we believe this is an inflection point.
BUTCHER: Thank you very much.
Market Insights
by Jan van Eck, CEO
An innovator of investment solutions, Jan van Eck has created a multitude of strategies spanning international, emerging markets, and commodities opportunities. He plays an active role in shaping the firm’s actively managed and ETF investment offerings. Jan’s research focus is on developments in China and technology’s effect on the financial services industry.
IMPORTANT DISCLOSURE
1Source: CEIC, HSBC. Data as of December 2015.
2Source: Bloomberg, March 31, 2016.
This content is published in the United States for residents of specified countries. Investors are subject to securities and tax regulations within their applicable jurisdictions that are not addressed on this content. Nothing in this content should be considered a solicitation to buy or an offer to sell shares of any investment in any jurisdiction where the offer or solicitation would be unlawful under the securities laws of such jurisdiction, nor is it intended as investment, tax, financial, or legal advice. Investors should seek such professional advice for their particular situation and jurisdiction. You can obtain more specific information on VanEck strategies by visiting Investment Strategies.
The views and opinions expressed are those of the speaker(s) and are current as of the posting date. 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.
Please note that Van Eck Securities Corporation offers investment portfolios that invest in the asset class(es) mentioned in this post and video. You can lose money by investing in a commodities fund. Any investment in a commodities 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. A commodities fund is subject to the risks associated with its investments in commodity-linked derivatives, risks of investing in wholly owned subsidiary, risk of tracking error, risks of aggressive investment techniques, leverage risk, derivatives risks, counterparty risks, non-diversification risk, credit risk, concentration risk and market risk. 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 risk, liquidity risk, interest-rate risk, market risk, credit risk, valuation risk and tax risk. 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 a commodities fund could be significantly higher than 50% of the security’s value. Investment in commodity markets may not be suitable for all investors. A commodity 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 any investment strategy 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.
Xtrackers II Target Maturity Sept 2028 EUR Corporate Bond UCITSETF 1D (XB28 ETF) med ISIN LU2810185665, försöker följa Bloomberg MSCI Euro Corporate September 2028 SRI-index. Bloomberg MSCI Euro Corporate September 2028 SRI-index följer företagsobligationer denominerade i EUR. Indexet speglar inte ett konstant löptidsintervall (som är fallet med de flesta andra obligationsindex). Istället ingår endast obligationer som förfaller mellan oktober 2027 och september 2028 i indexet (Denna ETF kommer att stängas i efterhand). Indexet består av ESG (environmental, social and governance) screenade företagsobligationer. Betyg: Investment Grade.
Denna börshandlade fonds TER (total cost ratio) uppgår till 0,12 % p.a. Xtrackers II Target Maturity Sept 2028 EUR Corporate Bond UCITSETF 1D är den enda ETF som följer Bloomberg MSCI Euro Corporate September 2028 SRI-index. ETFen replikerar det underliggande indexets prestanda genom samplingsteknik (köper ett urval av de mest relevanta indexbeståndsdelarna). Ränteintäkterna (kupongerna) i ETFen delas ut till investerarna (Årligen).
Denna börshandlade fond lanserades den 25 september 2024 och har sin hemvist i Luxemburg.
Index nyckelfunktioner
Bloomberg MSCI Euro Corporate September 2028 SRI Index syftar till att spegla resultatet på följande marknad:
Endast investeringsklass
Euro-denominerad företagsobligationsmarknad med fast ränta
Obligationer med förfallodatum på eller mellan 1 oktober 2027 och 30 september 2028
Exklusive obligationer som inte uppfyller specifika miljö-, sociala och styrningskriterier
Från och med den 1 oktober 2027 kommer referensindexet även att inkludera vissa eurodenominerade statsskuldväxlar utgivna av vissa europeiska regeringar med 1 till 3 månader kvar till löptid
Det betyder att det går att handla andelar i denna ETF genom de flesta svenska banker och Internetmäklare, till exempel DEGIRO, Nordnet, Aktieinvest och Avanza.
Fondflöden spårar hur mycket pengar investerare sätter in i eller tar ut från IncomeShares börshandlade produkter. Positiva fondflöden innebär att mer pengar kommer in än går ut – ett tecken på efterfrågan på börshandlade produkter.
Kumulativa fondflöden har ökat varje månad under 2025. I slutet av augusti nådde de 72,4 miljoner dollar. Det är över 8 miljoner dollar i nya pengar som tillkommit enbart i augusti – den största månatliga ökningen sedan maj.
JPMorgan Global IG Corporate Bond Active UCITSETF USD (acc) (JIGG ETF) med ISIN IE000S2QZKI8, är en aktivt förvaltad börshandlad fond.
ETFen investerar i företagsobligationer utfärdade av företag världen över i lokal valuta. De värdepapper som ingår filtreras enligt ESG-kriterier (miljömässiga, sociala och bolagsstyrningsrelaterade). Alla löptider ingår. Rating: Investment Grade.
Den börshandlade fondens TER (total expense ratio) uppgår till 0,25 % per år. Ränteintäkterna (kuponger) i ETFen ackumuleras och återinvesteras.
JPMorgan Global IG Corporate Bond Active UCITSETF USD (acc) är en mycket liten ETF med 10 miljoner euro i förvaltningstillgångar. ETFen lanserades den 20 maj 2025 och har sitt säte i Irland.
Investeringsmål
Delfondens mål är att uppnå en långsiktig avkastning som överstiger jämförelseindexet genom att aktivt investera huvudsakligen i globala företagsobligationer med investment grade-värde.
Riskprofil
Värdet på din investering kan både minska och öka och du kan få tillbaka mindre än du ursprungligen investerade.
Värdet på skuldebrev kan förändras avsevärt beroende på ekonomiska förhållanden och ränteförhållanden samt emittentens kreditvärdighet. Emittenter av skuldebrev kan misslyckas med att uppfylla betalningsförpliktelser eller så kan skuldebrevens kreditbetyg sänkas. Dessa risker ökar vanligtvis för skuldebrev under investment grade, vilka också kan vara föremål för högre volatilitet och lägre likviditet än skuldebrev med investment grade. Kreditvärdigheten för skuldebrev utan kreditbetyg mäts inte med hänvisning till ett oberoende kreditvärderingsinstitut.
Efterställda skuldebrev är mer benägna att drabbas av en partiell eller fullständig förlust vid emittentens fallissemang eller konkurs eftersom alla skyldigheter gentemot innehavare av emittentens prioriterade skuld måste uppfyllas först. Vissa efterställda obligationer är inlösbara, vilket innebär att emittenten har rätt att köpa tillbaka dem till ett visst datum och pris. Om sådana obligationer inte ”inlöses” kan emittenten förlänga deras förfallodag ytterligare eller skjuta upp eller minska kupongbetalningen.
Konvertibla obligationer är föremål för de kredit-, ränte- och marknadsrisker som är förknippade med både skuldebrev och aktier och för risker som är specifika för konvertibla värdepapper. Konvertibla obligationer kan också vara föremål för lägre likviditet än de underliggande aktierna.
Villkorade konvertibla skuldebrev kommer sannolikt att påverkas negativt om specifika utlösande händelser inträffar (enligt avtalsvillkoren för det emitterande företaget). Detta kan bero på att värdepapperet konverteras till aktier till ett rabatterat aktiekurs, att värdepapperets värde skrivs ner, tillfälligt eller permanent, och/eller att kupongbetalningar upphör eller skjuts upp.
Statliga skuldebrev, inklusive de som emitteras av lokala myndigheter och myndigheter, är föremål för marknadsrisk, ränterisk och kreditrisk. Regeringar kan fallera med sina statsskulder och innehavare av statsskulder (inklusive delfonden) kan ombedas att delta i omläggningen av sådana skulder och att bevilja ytterligare lån till statliga enheter. Det finns inget konkursförfarande genom vilket statsskulder som en regering har fallerat på kan drivas in helt eller delvis. Globala ekonomier är starkt beroende av varandra och konsekvenserna av en suverän stats fallissemang kan vara allvarliga och långtgående och kan leda till betydande förluster för delfonden.
Tillväxtmarknader kan vara föremål för ökad politisk, regleringsmässig och ekonomisk instabilitet, mindre utvecklade förvarings- och avvecklingsmetoder, dålig transparens och större finansiella risker. Skuldpapper från tillväxtmarknader och skuldebrev under investment grade kan också vara föremål för högre volatilitet och lägre likviditet än skuldebrev som inte är från tillväxtmarknader respektive investment grade.
Hållbarhetsrisk kan väsentligt negativt påverka en emittents finansiella ställning eller rörelseresultat och därmed värdet av den investeringen. Dessutom kan det öka delfondens volatilitet och/eller förstärka befintliga risker för delfonden.
Delfonden strävar efter att ge en avkastning över jämförelseindexet; delfonden kan dock underprestera jämförelseindexet.
Mer information om risker finns i avsnittet ”Riskinformation” i prospektet.
Det betyder att det går att handla andelar i denna ETF genom de flesta svenska banker och Internetmäklare, till exempel Nordnet, SAVR, DEGIRO och Avanza.