VanEck Inflation Allocation ETF

RAAX

Market cap $245M

The “debasement trade” has been a persistent investment theme this year as the market translates trade disputes, fiscal deficits, rate policy, and geopolitical tension into a negative outlook for the fiat world, and more specifically, the U.S. dollar.

RAAX aims for long-term total returns by investing in real assets through an "ETF of ETFs" structure, with major allocations to energy (45%), gold (25%), and a blend (30%). The fund has performed well during the recent inflationary environment, achieving a +37% total return since early 2022. Despite its performance, the analysis suggests RAAX's complex structure and 0.75% expense ratio may be a drawback.

Inflation-protection ETFs RAAX and PPI recently hit a 52-week high as the OECD raised U.S. inflation forecasts.

Inflation remains a significant concern in May 2025 due to the Trump administration's trade policies and tariffs, despite recent declines in inflationary pressures. The VanEck Real Assets ETF is positioned to benefit from rising inflation, holding assets in energy, real estate, and other sectors that thrive in inflationary environments. RAAX has shown a bullish trend since the 2020 pandemic low, with a recent recovery above $30 following the "Liberation Day" tariff-induced correction.

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Last week, I moderated two panels on real assets and infrastructure for completely different sets of panelists and audiences. Despite the differences, there were many similarities among the two panels.

Concerns about inflation are top of mind again, with consumer prices and producer prices rising higher last week. This impacted the bond market as well as commodity prices.

U.S. inflation jumped in March, surpassing expectations primarily due to higher petrol and shelter costs, dashing hopes of a June interest rate cut by the Fed.

The VanEck Inflation Allocation ETF is an actively managed ETF of ETFs targeting exposure to real assets. The strategy has outperformed a peer group of commodity focused or inflation hedging equity ETFs in 2023. We believe RAAX should benefit from easing inflation and declining interest rates as supportive to the demand for commodities including gold into 2024.