The U.S. stock market is always in a state of flux. Between ongoing wars, tariffs and political turmoil, it’s hard to know what financial investments are built on stable ground, and which ones will have their foundation crumble underneath them. These shaky market conditions do, however, have an upside, in that they make real assets far more attractive.
A real asset is a physical asset, such as real estate, land and precious metals, that can be seen and touched in the real world. When the market gets shaky, many run toward real asset investments to keep their portfolios from crumbling. One way to invest in real assets without needing to fix toilets and unclog drains is through an exchange-traded fund (ETF) such as the VanEck Real Asset Allocation ETF (RAAX).
RAAX is an actively managed fund of funds that seeks to maximize long-term real returns. To do this, the fund holds ETPs with exposure to assets that typically hold their value in an inflationary environment, such as commodities, real estate, natural resources and infrastructure, as well as companies that own or produce such assets. These investments may include equity of any market cap, debt of any duration or credit quality or emerging-market securities.
The fund’s active manager relies on a model that incorporates technical, macroeconomic and sentiment indicators to allocate among investments. To minimize downside risk during market declines, RAAX may hold up to 100% cash or equivalents when indicated by the model.
The fund has assets under management of around $211.32 million and an expense ratio of 0.75%. It is currently down 1.65% over the last month but is up 6.71% over the last three months and up a whopping 20.79% year to date.
Top holdings include VanEck Commodity Strategy ETF (NASDAQ: PIT), 19.33%; Global X U.S. Infrastructure Development ETF (NASDAQ: PAVE), 11.76%; VanEck Energy Income ETF (NASDAQ: EINC), 10.31%; Energy Select Sector SPDR Fund (NASDAQ: XLE), 8.27%; Materials Select Sector SPDR Fund (NASDAQ: XLB), 6.30%; iShares Residential and Multisector Real Estate ETF (NASDAQ: REZ), 5.58%; VanEck Uranium and Nuclear ETF (NASDAQ: NLR), 4.22%; VanEck Gold Miners ETF (NASDAQ: GDX), 3.03%; VanEck Natural Resources ETF (NASDAQ: HAP), 2.43% and iShares Global Industrials ETF (NASDAQ: EXI), 1.52%.
Chart courtesy of www.stockcharts.com
Now, while retreating into real assets may seem appealing, you should always plan your escape routes carefully. Investors should do their due diligence before adding any stock, fund or ETF to their holdings.
As always, I am happy to answer any of your questions about ETFs, so do not hesitate to send me an email. You just may see your question answered in a future ETF Talk.
