April Performance Summary
The VanEck Vectors Real Asset Allocation ETF (RAAX) launched, on April 9, into a period of strong performance for real assets. RAAX performed well on both an absolute and relative basis. Through April, in the first 16 days of its life, RAAX returned +2.98% based on net asset value versus +2.41% for its benchmark, the Blended Real Asset Index, which is comprised of an equally weighted blend of the returns of Bloomberg Commodity Index, S&P Real Assets Equity Index, and VanEck Natural Resources Index*. Equal weightings are reset monthly.
RAAX’s positioning was moderately defensive in April, and it was fully invested across commodities, natural resource equities, and Master Limited Partnerships (“MLPs”). The largest real asset investments were in diversified commodities (30%), gold bullion (20%), and agribusiness equities (20%).
*The Blended Real Asset Index is calculated by VanEck and comprises an equally weighted blend of the returns of Bloomberg Commodity Index, S&P Real Assets Equity Index, and VanEck® Natural Resources Index. Equal weightings are reset monthly. The Blended Real Asset Index is an appropriate benchmark because it represents the various real assets investments considered by the Fund covering natural resources equities, MLPs, infrastructure, real estate, and commodity futures.
The RAAX fund aims to generate long-term returns
The VanEck Vectors Real Asset Allocation ETF (RAAX) aims to generate long-term total returns. The fund seeks to limit market drawdowns during adverse conditions by allocating primarily to exchange-traded products that provide exposure to real assets like commodities, real estate, natural resources, and infrastructure.
Portfolio composition driving returns
The healthy performance of the RAAX fund in April could be due to proper asset allocation in different real assets. The fund’s investment portfolio comprised nine ETFs. The largest exposure was to the PowerShares Optimum Yield Diversified Commodity ETF (PDBC) at 29.9%. Other prominent ETFs in the portfolio included the VanEck Vectors Agribusiness ETF (MOO) at 20.1%, the VanEck Vectors Gold Miners ETF (GDX) at 10.1%, and the iShares Gold Trust (IAU) at 10%.