TOM BUTCHER: Why should investors consider an allocation to commodities?
ROLAND MORRIS: I think the most important thing for investors is portfolio diversification. It is particularly important in a world that is dominated by central bank activity. Right now, for several reasons, we think commodities are very attractive and should be part of an investor's portfolio. We believe at VanEck that commodities have been in a fairly severe bear market for approximately five years. We now believe that they are in the process of forming a bottom, and that is really because we think that supply has been contained by reduced investment. From a timing standpoint, we think this is probably an appropriate time for investors to consider commodities. More broadly, when you consider other asset values around the world, central banks have been very active with experimental monetary policy since the 2009 financial crisis. Many people believe that they may have driven traditional asset classes to higher valuations -- or perhaps, more fairly, to be fully valued. If you look particularly at developed markets, we believe that there is decent probability that traditional stocks and bonds could now be over-valued. If this is the case, then the diversification of owning commodities would be really important for portfolios. This is particularly true if we were to resolve the economy going forward with any inflationary pressures, which is what central banks are trying to create. Commodities have the potential to be a very good hedge for any inflationary events that might occur. As I have said, the real key is that commodities may provide portfolio diversification. Other asset classes seem very fully valued at the moment, and commodities, to us, seem less expensive, and can provide an inflation hedge.
The views and opinions expressed are those of the speaker and are current as of the video's posting date. Video 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. For more information about VanEck Funds, VanEck Vectors ETFs or fund performance, visit vaneck.com. Any discussion of specific securities mentioned in the video commentaries is neither an offer to sell nor a solicitation to buy these securities. Fund holdings will vary. All indices mentioned are measures of common market sectors and performance. It is not possible to invest directly in an index. Information on holdings, performance and indices can be found at vaneck.com.
Please note that Van Eck Securities Corporation offers investment products that invest in the asset class(es) included in this video. Hard Assets investments are subject to risks associated with real estate, precious metals, natural resources and commodities and events related to these industries, foreign investments, illiquidity, credit, interest rate fluctuations, inflation, leverage, and non-diversification.
Investing involves risk, including possible loss of principal. An investor should carefully consider investment objectives, risks, charges and expenses of the investment company before investing. Call 800.826.2333 or click below to obtain a prospectus and summary prospectus which contain this and other information. Please read the prospectus and summary prospectus carefully before investing. A Fund prospectus is available at vaneck.com.