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Commodities Stand Out

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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.

Investment Outlook: Commodities Stand Out

Video – Investment Outlook: Commodities Stand Out

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.

China’s Consumer-Driven ”New” Economy: Exciting, Yet ”Lumpy”

BUTCHER: What are your views on China?

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.

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Oct. 24 crypto market update & Performance attribution Hashdex Crypto Index ETPs

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Please find below Hashdex monthly crypto market update and performance attribution for Hashdex Crypto-Index ETPs for October 2024.

Please find below Hashdex monthly crypto market update and performance attribution for Hashdex Crypto-Index ETPs for October 2024.

With October often showing strong seasonality for crypto assets, this month’s results reflect a promising trend for Bitcoin, although gains were more limited across Altcoins. As outlined in our latest CIO note, “Beyond Trump and Harris: Five Congressional Races That May Impact Crypto’s Future”, several upcoming US congressional races could shape the regulatory landscape for crypto, with potential implications for institutional adoption and future price action. Bipartisan support for the asset class is expected to grow, depending on the results of key races.

We will share some updates during the week, if you need any inputs on US elections, feel free to reach out to us.

Hashdex Crypto Index ETPs: performances (USD) as of end of October 24

Beta Index ETP Nasdaq Crypto Index ETP (HASH or HDX1) (largest Crypto Index ETP in Europe): October +7.1%, YTD +45%, 12M +89%.

• Smart-Beta Index ETP – Crypto Momentum Index ETP (HAMO or HDXM): October -0.5%, YTD +1.2%, 12M +71%.

Market Update – October 24

October, commonly known as ”Uptober” for its seasonally strong performance for Bitcoin, continued this trend in 2024. The month began with a volatile period, as the Nasdaq Crypto Index (NCI) initially gave back gains from September. All NCI constituents declined in the first ten days, with the exception of Uniswap, which announced plans for its own layer-two network on Ethereum.

Mid-month, the sentiment shifted, with a sharp rally that drove Bitcoin close to its all-time high by the 29th. The NCI ultimately closed the month up 7.1%, significantly outpacing traditional markets as both the S&P 500 and Nasdaq 100 declined slightly. This rally coincided with a sharp increase in former president Donald Trump’s odds in election betting markets, generating additional optimism around Bitcoin.

While Bitcoin posted a robust 10.6% gain, Altcoins generally underperformed. The notable positive exception among altcoins was Solana, which rose 9.0%. In contrast, Ripple declined 18.6% due to ongoing SEC litigation, and Polygon’s MATIC dropped over 20% as it migrated to a new token model (POL).

Nasdaq Crypto Index (NCI) relative to other asset class in October 24

Source: Hashdex, as of 30/10/24.

In comparison with traditional assets, the NCI’s 7.1% gain far outpaced the S&P 500 and Nasdaq 100, both of which posted slight declines. This performance underscores the potential for crypto assets to provide upside during periods of broader market uncertainty. The majority of this outperformance was driven by Bitcoin’s strength, underscoring its role as a cornerstone of the crypto asset class and its growing appeal as a macroeconomic hedge.

Performance attribution:

Nasdaq Crypto Index (NCI)

The NCI recorded positive returns for most of its primary constituents, with Bitcoin (+10.6%) leading the gains. Solana (SOL) also contributed positively, rising 9.0%. However, Ripple (XRP) and Polygon’s MATIC weighed on the index, with losses of 18.6% and over 20%, respectively. Ripple’s decline was largely attributed to ongoing legal issues with the SEC, while MATIC’s transition to the POL token created additional downward pressure.

Source: Hashdex, as of 31/10/24.

Crypto Momentum Factor Index

The Crypto Momentum Factor Index showed a slight monthly decline of 0.5% in October, reflecting the underperformance of altcoins in general. Although Tron (TRX) remained relatively stable, other altcoins in the index faced headwinds, leading to a small monthly loss for the index.

Source: Hashdex, as of 31/10/24.

Correlation (3m) to traditional asset classes

Source: Hashdex, as of 31/10/24. NCI for Nasdaq Crypto Index.

Hashdex Nasdaq Crypto Index ETP

Largest Crypto Index ETP in Europe, AUM ~$400m

ISIN: CH1184151731 / Tickers: HASH (SIX and Euronext) or HDX1 (Xetra) – tradable in USD, EUR, CHF and GBP

Hashdex Crypto Momentum Factor ETP

ISIN: CH1218734544 / Tickers: HAMO (SIX and Euronext) or HDXM (Xetra) – tradable in USD, EUR, CHF and GBP

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GSGR ETF investerar i gröna obligationer från hela världen

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Goldman Sachs Global Green Bond UCITS ETF EUR (Dist) (GSGR ETF) med ISIN IE000SYQFJV2strävar efter att spåra Solactive Global Green Bond Select-index. Solactive Global Green Bond Select-index följer gröna obligationer. Alla löptider ingår. Betyg: Investment Grade.

Goldman Sachs Global Green Bond UCITS ETF EUR (Dist) (GSGR ETF) med ISIN IE000SYQFJV2strävar efter att spåra Solactive Global Green Bond Select-index. Solactive Global Green Bond Select-index följer gröna obligationer. Alla löptider ingår. Betyg: Investment Grade.

Den börshandlade fondens TER (total cost ratio) uppgår till 0,22 % p.a. Goldman Sachs Global Green Bond UCITS ETF EUR (Dist) är den enda ETF som följer Solactive Global Green Bond Select-indexet. ETFen replikerar det underliggande indexets prestanda genom fullständig replikering (köper alla indexbeståndsdelar). Ränteintäkterna (kuponger) i ETFen delas ut till investerarna (halvårsvis).

Denna ETF lanserades den 13 februari 2024 och har sin hemvist i Irland.

Mål

Goldman Sachs Global Green Bond UCITS ETF är en passivt förvaltad, hållbar global obligationsfond som uteslutande investerar i gröna obligationer enligt bedömningen av Goldman Sachs Asset Managements investeringsteam för gröna obligationer.

Handla GSGR ETF

Goldman Sachs Global Green Bond UCITS ETF EUR (Dist) (GSGR ETF) är en börshandlad fond (ETF) som handlas på London Stock Exchange.

London Stock Exchange är en marknad som få svenska banker och nätmäklare erbjuder access till, men DEGIRO gör det.

Börsnoteringar

BörsValutaKortnamn
London Stock ExchangeEURGSGR
SIX Swiss ExchangeEURGSGR

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Microsoft considers bitcoin, UBS launches tokenized fund, and MicroStrategy will buy $42B in BTC

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Crypto markets faced a volatile week as key macroeconomic events approached, with the upcoming US presidential election and anticipated Fed rate decision fueling uncertainty in risk assets. Bitcoin (BTC) rose 1.7%, ether (ETH) declined 1%, Solana (SOL) fell 8.2%, and the Nasdaq Crypto IndexTM (NCITM) was down 0.5%.

Crypto markets faced a volatile week as key macroeconomic events approached, with the upcoming US presidential election and anticipated Fed rate decision fueling uncertainty in risk assets. Bitcoin (BTC) rose 1.7%, ether (ETH) declined 1%, Solana (SOL) fell 8.2%, and the Nasdaq Crypto IndexTM (NCITM) was down 0.5%.


Microsoft to consider bitcoin investment starting December

According to a new SEC filing, Microsoft is considering the possibility of investing in Bitcoin as a hedge strategy against inflation despite opposition from its Board of Directors. This move, by one of the world’s largest companies, would mark a significant step in institutional adoption for Bitcoin.

MicroStrategy discloses plans to buy $42B of BTC

The firm announced bold plans to raise $42 billion over the next three years to acquire more bitcoin. This new wave of capital will be split equally, with $21 billion from equity issuance and $21 billion from debt offerings, in a project called the ”21/21” plan. This move, led by founder Michael Saylor, underscores bitcoin’s potential as a valuable hedge against inflation and highlights its appeal as a strategic investment option.

UBS launches its first tokenized fund on Ethereum

UBS Asset Management has launched its first tokenized fund, the USD Money Market Investment Fund Token (uMINT), a money market fund built on the Ethereum blockchain, available through authorized partners. The launch supports the growing demand for tokenized financial assets and leverages distributed technology to enhance fund issuance and distribution, as well as UBS’s broader strategy to expand its tokenization services.


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