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Profit from the Commodities Rally with These ETFs

Neena Mishra
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  • (0:45) - Commodities On The Rise: Will This Continue?
  • (3:00) - Surging Oil Prices: What Is The Best Way To Invest
  • (5:30) - 2018 Gold Outlook: Gold Metal Or Miners?
  • (8:00) - VanEck Vectors Agribusiness ETF: MOO
  • (9:45) - Real Asset Allocation ETF: RAAX
  • (11:40) - Episode Roundup: Podcast@Zacks.com

In this episode of ETF Spotlight, I talked with Roland Morris, Chief Commodity Strategist and Portfolio Manager at VanEck.

Commodities are rallying after many years of underperformance. The Bloomberg Commodity Spot Index has surged more than 15% over the past year.

Roland says that first quarter of 2016 marked the low for the commodities cycle. Weak global growth, oversupply and a strong dollar had kept commodities under pressure but some of these headwinds have turned into tailwinds over the past few months.

He sees the trend continuing as it appears that we are in a classic cyclical bull cycle for commodities and these cycles typically last 5-7 years.

We discussed why commodities deserve a place in a diversified portfolio. Commodities provide diversification benefits and as well as a hedge against inflation.

Oil, one of the best performing commodities this year, had soared to its highest levels since 2014, thanks to increasing demand, OPEC cuts, rising geopolitical risks and looming sanctions on Iran and Venezuela,

However, prices plunged last week on reports that OPEC and Russia are set to increase output.

Roland sees this as a temporary pause. He thinks that oil will stay range-bound which is good for US shale oil producers. He believes there is not a not a lot of spare capacity. On the other hand, global demand has been very steady.

We discussed the VanEck Vectors Unconventional Oil & Gas ETF FRAK that holds companies involved in unconventional oil and natural gas production, exploration and refining, and the VanEck Vectors Oil Services ETF OIH that holds 25 of the largest US oil services companies.

Gold is somewhat different from other commodities. It is seen as a safety asset which tends to perform well in inflationary environments. It is also a hedge against geopolitical risks. Thanks to tax cuts and an expansionary budget, inflation could perk up with some help from the tight labor markets.

Roland says gold companies are in excellent financial shape now and thus it makes sense to invest in gold mining ETFs like the VanEck Vectors Gold Miners ETF GDX.

We also discussed the VanEck Agribusiness ETF MOO, which benefits from rising global demand for food.

Finally, we talked about the recently launched VanEck Vectors Real Asset Allocation ETF RAAX, which is a one-stop solution for comprehensive exposure to real assets. It aims to maximize real returns while reducing downside risk.

If you want to learn more about VanEck ETFs please visit www.vaneck.com.

Please make sure to tune in for our next podcast. If you have any comments or questions, please email podcast@zacks.com.

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VANECK-GOLD MNR (GDX): ETF Research Reports
 
VANECK-OIL SVC (OIH): ETF Research Reports
 
VANECK-UNC O&G (FRAK): ETF Research Reports
 
VANECK-AGRIBUS (MOO): ETF Research Reports
 
VANECK-V RL AA (RAAX): ETF Research Reports
 
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