The VanEck Vectors
® Real Asset Allocation ETF (“RAAX”) returned +4.61% versus +6.47% for the Bloomberg Commodity Index. In general, most real assets continue to benefit from the expectation of higher inflation, while oil prices were lifted higher due to supply constraints that resulted from the deadly storm in Texas. On the other hand, income producing real assets were negatively impacted by the rapid surge in interest rates. Gold prices remain under pressure due to optimism about future growth and the subsequent rise in interest rates. And lastly, Bitcoin, which RAAX added exposure to for the first time last month, surged from $32,601 to an intra-month and all-time high of $57,355.
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Futures positions held and changes made by hedge funds across commodities, forex, bonds and stock indices up until last Tuesday, February 23. A week that saw growing unease across markets as bond yields continued to rise. A continued rally in commodities attracted profit taking from funds in both energy and metals while they added further length to an already record agriculture long.
Loonie tops 80 cents for first time since 2018 as commodities rise
Ian Vandaelle, BNN Bloomberg VIDEO SIGN OUT
The Canadian dollar broke above 80 cents U.S. Thursday, hitting its highest level since February 2018 amid speculation the global reflation trade will continue to lift commodity prices, driving currencies traditionally tied to the commodities complex higher.
That reflation trade, which has investors buying into industrially-sensitive commodities in anticipation of an uptick in global economic activity, has pushed copper to a 10-year high and boosted West Texas Intermediate oil prices north of US$63 per barrel for the first time since early 2020.
In a note to clients, Scotiabank Chief FX Strategist Shaun Osborne said there could be further upside for the Canadian dollar against its American counterpart if commodities extend their climb higher and the spread between Canadian and U.S. bond yields continues to narrow.
The VanEck Vectors
® Real Asset Allocation ETF (“RAAX”) returned 7.21+% versus +2.63% for the Bloomberg Commodity Index. January started off strongly, RAAX was up 5.39% mid-way through the month, but it gave back much of this performance to finish the month with a total return of 1.24% as fears of dangerous COVID-19 mutations weighed upon the market.[1]
RAAX invests in three types of real assets: financial assets, income assets and resource assets. RAAX evolved and diversified its financial assets in February by gaining exposure to the price of bitcoin. This was accomplished with an initial investment of 2% into the Grayscale Bitcoin Trust. We believe that digital assets may offer RAAX many of the same benefits as gold. Most notably, protection against inflation and currency debasement in addition to overall portfolio diversification.