Building a 2025 Portfolio: Inflation Hedges and AI Plays

An investment in the VanEck Bitcoin ETF (“HODL”) and VanEck Merk Gold ETF (“OUNZ”) (collectively, the “Trusts”) involves significant risk and may not be suitable for all investors.

The Trusts are not investment companies registered under the Investment Company Act of 1940 (“1940 Act”) and therefore are not subject to the same protections as mutual funds or ETFs registered under the 1940 Act.

Starting conditions matter, so let’s level set current conditions that will set the tone for investors in 2025.

• Economic growth and corporate health: The US economy is healthy and growing above trend near 3%, while corporate profits remain healthy and are accelerating. However, S&P 500 valuations are priced for perfection, trading at a premium relative to historical averages.
• Sticky inflation and Fed policy: Inflation has come down, but remains sticky above the US Federal Reserve’s (Fed’s) long-term 2% target. Meanwhile, the Fed has entered an easing cycle, contributing to already easy financial conditions.
• Fiscal challenges: US federal debt and deficit have reached unprecedented levels, reducing foreign demand for US Treasuries and prompting calls for drastic reform to debt issuance and deficit spending.
• Policy shifts under a new administration: The Trump Administration’s “America first” platform—which focuses on tariffs, reshoring, immigration reform, tax cuts and a reduced government spending—may introduce implicit inflationary pressures.
• Asset performance and tight spreads: Real assets such as gold, silver and bitcoin are among the best performing assets globally, while corporate fixed rate bond spreads across high yield and investment grade are near historically tight levels.

TLDR: GDP and corporate profit growth are healthy, but markets are priced for it. Inflation remains sticky, while the new administration is focused on implicitly inflationary policies and we have an unsustainable debt and deficit situation.

You can read CEO Jan van Eck’s 2025 outlook focusing on the key macroeconomic trends—US fiscal reckoning, inflation, the next phase of AI and India’s growth—that investors should keep in mind here: 2025 Outlook: At the Doorstep of the Reckoning.

Below I share actionable ideas for incorporating these pivotal themes in an investment portfolio.

Theme 1 - The U.S. faces a fiscal reckoning as government spending cuts and inflation risks dominate the outlook.

Concerns of the fiscal, monetary, debt and deficit variety tend to drive investors toward safe havens, including non-financial real assets. For equity investors it is important to consider ways to diversify risks and consider concentration at the index and factor level, which all lean heavily in favor of technology and growth. Risk off and higher volatility periods tend to disproportionately impact corners of the market that have performed the best and/or are trading at the richest multiples.

VanEck’s suite of moat investing ETFs offers investors a number of compelling options to diversify their portfolios and capture relative value.

The VanEck Morningstar Wide Moat ETF (MOAT) is anchored on quality and relative value metrics. MOAT is currently tilted towards more cyclical sectors and near the bottom of the large cap spectrum, away from the richly valued top of the market.

The VanEck Morningstar SMID Moat ETF (SMOT) is based on the same quality and relative value approach and applies it to small and mid cap companies, with a tilt towards mid caps, which potentially have less sensitivity to interest rates and superior earnings growth profiles.

International equities have been out of favor given the growth and earnings power of US technology companies—in particular coupled with a stronger US dollar. Interest rates drive the cost of capital and command valuations. The US interest rate picture is far from clear with two to three cuts of 25 basis points each priced into 2025 projections. However, with the potentially inflationary policy mix of the incoming administration, some are even forecasting rate hikes from the Fed this year.

The European Central Bank (ECB) has a much clearer picture on growth and inflation and is forecasted to cut rates seven times in 2025. Lower rates create a lower hurdle for earnings multiples, allow for cheaper access to capital and are economically stimulative. We look for a narrowing gap between US and international equities in 2025 on the combination of better policy clarity, cheaper valuations and a potentially weakening US dollar in the second half of 2025.

The VanEck Morningstar International Moat ETF (MOTI) is a way to capture this trend through high quality companies trading at attractive valuations.

Theme 2 – Bull markets in gold and bitcoin are supported by inflationary pressures, fiscal uncertainty and de-dollarization trends

Despite a stronger dollar and rising real rates (both historically bad for gold) the yellow metal has performed remarkably well in the past year. The combination of a strong bid from global central banks looking to de risk and diversify US dollar based reserves, geopolitical risk and the overall health of the gold mining industry have been notable drivers.

These tailwinds remain in place, and gold remains a trusted risk off asset during periods of geopolitical conflict and recession risk. We think it remains prudent to maintain an allocation to gold in 2025.

The VanEck Merk Gold ETF offers investors a simple way to buy and hold gold through an exchange traded product, with the option to take physical delivery of gold if and when desired.

The fundamentals in the gold mining sector remain extremely healthy with attractive P/CF and all in sustaining costs at historically attractive levels. Moderate and growth oriented investors should also consider owning gold mining equities for additional leverage to the potential upside of the gold price.

For gold miners exposure, VanEck provides several options: International Investors gold Fund, VanEck Gold Miners ETF (GDX) and VanEck Junior Gold Miners ETF (GDXJ).

In last year’s outlook, we wrote about Bitcoin getting a seat at the grownup’s table in 2024 and it certainly has. The launch of spot Bitcoin ETFs and an incoming, more pro crypto administration have been supporting the price of Bitcoin.

Underneath the surface Bitcoin is also benefiting from the same factors that are benefiting gold. Bitcoin offers investors an alternative store of value that lives outside of the modern financial apparatus. With its transparent and fixed supply, exponential demand curve and ease of transfer, Bitcoin stands out as a compelling option. We believe Bitcoin has more room to run this cycle.

The VanEck Bitcoin ETF (HODL) offers liquid and efficient spot bitcoin access with a full fee waiver in place until the fund reaches $2.5B in AUM or January 10, 2026, whichever occurs first. After January 10, 2026, the Sponsor Fee will be 0.20%. Brokerage fees and commissions may apply. Please check with your broker.

Theme 3 - The next phase of AI is driving broader market benefits, while soaring electricity demand underscores the importance of nuclear and natural gas.

Powerful macroeconomic tailwinds are in place supporting infrastructure spending, coming from both the public and private sectors. New sources of demand from artificial intelligence and the clean energy transition are colliding with the need to upgrade existing, aging infrastructure. Meeting the projected demand from US data centers alone will require new power capacity equivalent to that of six New York Cities by 2030.

We believe a key component to meeting this demand will come from the nuclear energy sector. We are not alone in this view as companies such as Microsoft, Amazon, Google and Nvidia have pledged billions of dollars of fresh investment capital to the sector. Small modular reactors (SMRs) are a key component of this buildout, as they offer a safer, more portable and scalable solution compared to the capital and time intensive development of traditional nuclear facilities.

The VanEck Nuclear and Uranium ETF (NLR) offers comprehensive pure play exposure to this theme. NLR provides exposure to the entire nuclear power value chain, including utilities, uranium miners and service providers that contribute to the production, management, development and maintenance of the nuclear energy sector.

Theme 4 - India’s rapid growth and relative value present compelling opportunities.

Although US-based investors have had a hard time allocating capital outside of their home country, we continue to highlight the opportunity in the Indian equity market in particular, which has actually kept pace with the US in the past 20 years.

While the developed world grapples with high debt and deficits, bloated government and aging infrastructure, India benefits from a young, educated and digitally native demographic. Government reforms in capital markets and taxation have opened up the opportunity to invest in infrastrucure and technology. India is also home to more tech unicorns than any other country offering, an exciting pipeline of new and innovative companies potentially entering the market in the coming years.

We believe investors should continue to ride the strong economic momentum of the Indian economy. The difficulty for index-based EM allocators is the under-representation of India in broader benchmarks, which is why we highlight two unique approaches to capturing this exciting growth opportunity.

The VanEck India Growth Leaders ETF (GLIN) is built on an approach that combines growth, quality and value characteristics to rate and score Indian companies, resulting in holdings that consist of fundamentally sound Indian companies with attractive growth potential at a reasonable price. With any high growth opportunity, it is important to consider balance sheet quality and relative value, which is all embedded in GLIN’s process.

The VanEck Digital India ETF (DGIN) offers more focused access to the technological and consumer enablement themes that are at the center of India’s growth story.

For more value-oriented investors, we think it is an interesting time to consider adding exposure to China. China has been going through a structural rebalancing of their economy towards a more consumer driven model. They have had a painfully slow recovery from the COVID-19 pandemic, a crippled property sector and weak consumer sentiment. The good news is that these factors are all known by investors as well as policy makers and are reflected in prices.

China recently announced a series of stimulus measures aimed at shoring up capital flows and reigniting some of the stalled parts of their economy. While there is more to do, particularly on the fiscal side of the ledger, China remains at the forefront of technological innovation and have made major strides in key sectors, such as automotive, where they are the global leader in EV sales.

We think it makes sense to take advantage of both the relative value and depressed sentiment opportunity through exposure to some of the less economically sensitive growth sectors in the technology and consumer enablement areas of the economy in particular. The VanEck ChiNext ETF (CNXT) offers exposure to these unique corners of the market through a “Nasdaq of China” type approach, providing access to the 100 largest and most liquid stocks trading on the ChiNext market, which focuses on companies in innovative, high-growth sectors.

To receive more VanEck News & Insights, sign up in our subscription center.