Finance
Big change in global growth is bullish for commodities: VanEck CEO
Investors should consider commodities due to a “big change” involving international expansion, according to VanEck CEO Jan van Eck.
“The world economy started growing again,” van Eck told CNBC’s “ETF Edge” this week.
He singles out China, the world’s second-largest economy behind the U.S., as a key driver in the expansion.
“China which has been such a huge driver of growth and so negative for growth over the last year or two. Manufacturing PMI is now positive in China as of March,” said van Eck. “You now have growth. … So, that leads to your reflation trade.”
His firm has exposure to commodities from gold to energy to copper. Its exchange-traded funds include the VanEck Gold Miners ETF (GDX) and VanEck Oil Refiners ETF (CRAK). They’re up 10% and 9%, respectively, year to date.
Van Eck highlights copper‘s momentum as a positive sign for demand. The industrial metal is up almost 16% this year, as of Friday’s close.
“It’s a good measure of global economic growth and energy prices. [They] probably have gotten a little bit ahead of themselves, but they’re reflecting the world is growing,” he said.
He also sees U.S. government spending as bullish catalyst for the commodities trade.
“Fiscal spending is running so super high,” van Eck said. “That’s leading to this global growth trade, too. So, that’s why I like commodities because I think it’s more than just a headline.”
As of Friday’s close, the S&P GSCI Index Spot, which tracks commodities from crude oil to cocoa, is up 10% so far this year.
It appears T. Rowe Price is benefitting from the record growth in actively managed exchange traded funds.
Tim Coyne, the firm’s head of ETFs, reports the firm is seeing significant growth in the area — listing the T. Rowe Price Capital Appreciation Equity ETF (TCAF) and T. Rowe Price U.S. Equity Research ETF (TSPA) as two established strategies that can satisfy investor demand.
“I think having that professionally managed portfolio is really beneficial to clients,” Coyne told CNBC’s “ETF Edge” this week. “We’re seeing just… greater volatility [and] uncertainty across both the equity and fixed income markets.“
According to Coyne, the T. Rowe Price Capital Appreciation Equity ETF suits investors who are looking for long-term growth.
“The objective of the fund is to outperform the S&P 500 with lower volatility and greater tax efficiency,” he said. “It’s also a more concentrated portfolio, typically holding around a hundred names.”
As of April 24, the fund’s top holdings include Microsoft, Amazon, and Apple according to the T. Rowe Price website. But it’s not all Big Tech. The ETF also features smaller positions in companies like Becton Dickinson and Roper Technologies.
The T. Rowe Price Capital Appreciation Equity ETF is down about 5% so far this year while the S&P 500 is off about 7% However, the ETF is up close to 8% over the past year — roughly identical to the S&P 500’s performance.
Coyne notes the T. Rowe Price U.S. Equity Research ETF follows a similar strategy, but with a heavier weighting in top tech stocks.
“This is more of a large-cap growth product [T Rowe Price U.S. Equity Research ETF],” he said. “There are components of characteristics of both passive and active here. This fund is actually managed by our North American directors of research. So again, strong fundamental research is going into the stock selection.”
Both the T. Rowe Price U.S. Equity Research ETF and S&P 500 are down around 7% since the beginning of the year. Meanwhile, the fund is up almost 9% over the past year. That’s less than one percent better than the S&P 500’s performance.
T. Rowe Price U.S. Equity Research ETF vs. S&P 500
‘Some form of bear market’
Strategas Securities’ Todd Sohn thinks investment demand for active managers will continue to be strong.
“This is the type of the environment where it [active management] can actually shine,” the firm’s senior ETF and technical strategist said. “We are in some form of bear market. This is where the active manager really can come into hand and offer their solution they are doing right.”
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