Exchange Traded Funds (ETFs)

ETF Talk: Stabilize Your Portfolio Amid Market Tremors

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.

Exclusive ETF Talk: Finding Value in Your Brokerage

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.

Jim Woods

Jim Woods is a 20-plus-year veteran of the markets with varied experience as a broker, hedge fund trader, financial writer, author and newsletter editor. Jim is the editor of Forecasts & Strategies, Tactical Trader, TNT Trader, Five Star Trader, Bullseye Stock Trader, and The Deep Woods. His books include co-authoring, “Billion Dollar Green: Profit from the Eco Revolution,” and “The Wealth Shield: How to Invest and Protect Your Money from Another Stock Market Crash, Financial Crisis or Global Economic Collapse.” He’s also ghostwritten many books and articles, as well as edited content for some of the investment industry’s biggest luminaries. His articles have appeared on many leading financial websites, including StockInvestor.com, InvestorPlace.com, Main Street Investor, MarketWatch, Street Authority, Human Events and many others. Jim formerly worked with Investor’s Business Daily founder William J. O’Neil, helping to author training courses in the CANSLIM stock-picking methodology. The independent firm TipRanks rates Jim the No. 3 financial blogger in the world (out of more than 6,000). TipRanks calculates that, since 2012, he's made 361 successful recommendations out of 499 total, earning a success rate of 72% and a +15.3% average return per recommendation. He is known in professional and personal circles as “The Renaissance Man,” because his expertise includes such varied fields as composing and performing music; Western horsemanship, combat marksmanship, martial arts, auto racing and bodybuilding. Jim holds a BA in philosophy from the University of California, Los Angeles, and is a former U.S. Army paratrooper. A self-described “radical for capitalism,” he celebrates the virtue of making money from his Southern California horse ranch.