VanEck International Investors Gold Fund: Question & Answer
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Gold is one of the most vital metals in the world and a unique asset, with the ability to enhance portfolio diversification, act as store of value, and hedges against systemic risk. VanEck has long been considered a leader in gold-related investments and has been managing gold funds since 1968, including the nation’s first open-ended gold equity mutual fund. This blog intends to answer frequently asked questions about investing in gold mining companies, and more specifically, the VanEck International Investors Gold Fund (INIVX).
- Why invest in gold?
- How do you invest in gold?
- Why invest in gold miners?
- Are all gold mining companies the same?
- Who are the members of the Investment Team for the VanEck International Investors Gold Fund?
- How do you decide which gold companies to invest in?
- How can investors buy VanEck Mutual Funds?
Why invest in gold?
Gold has staying power, with a history in the international monetary system spanning over 2,500 years. For centuries, gold has served as a form of exchange, a safe haven investment (in times of financial market turmoil) as well as a hedge against severe inflation.
How do you invest in gold?
Primary ways to invest in gold are via physical bars, coins or jewelry, gold certificates, gold-backed exchange-traded products, or through shares in gold mining stocks (or gold miners).
Why invest in gold miners?
An investment in gold miners offers several benefits beyond that of other gold-related investments.
- Leverage to gold prices – For most gold miners, profitability is measured by the average cost of production relative to the current price of gold. High or rising gold prices can thus magnify profits earned by gold miners, which often translates to higher share prices.
- Yield opportunity – Investors are often being “paid” to own gold mining stocks, with many gold companies opting to return capital to shareholders in the form of dividends. On the other hand, investors in physical gold often have to pay for ownership (in the form of storage).
- Idiosyncratic return drivers – Performance of gold miners is not wholly dependent on the price of gold. Over time, gold miners may exploit efficiency gains from new technologies, capitalize on exploration success or else become the target of a larger acquisition. All of these factors may influence their return prospects regardless of gold prices.
Visit the fund page for the fact sheet, holdings, performance and more.
Are all gold mining companies the same?
No, not all gold mining companies are the same. The gold mining industry can be segmented in various ways. One way is based on the primary business activity of the gold miner. For example, many gold miners are involved in the exploration of quality mine sites as well as development of preliminary mine operations. However, other gold miners may rely on acquisitions to build gold reserves or act as a project financier for several gold mining projects.
Another way gold miners are often segmented is based on their overall mine operation size and gold production levels:
- Juniors – This segment is represented by early-stage explorers and developers with, generally, very little production. While many of these companies demonstrate a high risk of failure, they also offer tremendous upside as targets for acquisition by larger miners.
- Mid-Tiers – A mix of companies with sizable and diversified gold production, substantial growth potential, and smaller market capitalization. They tend to exhibit less risk than their exploration peers.
- Majors – Tend to be less volatile, more mature mining companies, with larger portfolios than their smaller peers. These are well-capitalized companies with decades of history and world-spanning operations.
Who are the members of the Investment Team for the VanEck International Investors Gold Fund?
Effective May 1, 2023, Joe Foster will be stepping back from his current role as Portfolio Manager for the Fund, and Imaru Casanova, the Fund’s current Deputy Portfolio Manager, will be taking over as Portfolio Manager. Mr. Foster will remain on the Investment Team as Gold Strategist. Adam Graf is a Senior Analyst on the Fund.
The Investment Team reflects the approach initiated by VanEck founder John van Eck at the Fund’s launch of including geologists and people with on-the-ground experience to provide unique, differentiated perspectives on company operations and forecasts.
For more details about the transition and the Investment Team, read our Gold Portfolio Manager Transition Plans FAQ.
How do you decide which gold companies to invest in?
The Fund’s investment methodology pairs top-down, macroeconomic assessment of gold bullion markets with bottom-up, fundamental company research.
- Top-Down – Macroeconomic analysis of systemic financial risks, inflation, monetary policy, interest rates, currencies, debt levels and physical supply (among other factors) help the Investment Team identify gold price trends over the medium- to longer-term. A positive or bullish gold price outlook favors overweight allocation to high-cost producers and junior miners while a negative or bearish gold price outlook favors overweight allocation to low-cost producers, senior gold miners, royalty companies and gold bullion. These are well-capitalized companies with decades of history and world-spanning operations.
- Bottom-Up – Fundamental security research relies on company analysis, comprehensive modeling and qualitative research. Company analysis takes into consideration factors such as management expertise, reserve location, geopolitics, deposit types, drill results, mine engineering and labor issues. Modeling entails forecasting mine production, sustaining costs, reserves, capital structure, and cash flow, as well as gauging absolute and relative valuations. Qualitative research includes mine site visits and meetings with company management to evaluate project execution, site accessibility, health and safety measures as well as environmental impact.
Combining these elements, the Investment Team is able to narrow the field of approximately 400 gold companies to portfolio of around 45-65 companies (ideally, those with the greatest unrealized value potential). Though long-term conviction often has the greatest influence over sizing of individual position within the portfolio, the Investment Team adjusts its portfolio weightings according to changes to their gold price outlook.
How can investors buy VanEck Mutual Funds?
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Important Disclosures
This is not an offer to buy or sell, or a recommendation to buy or sell any of the securities/financial instruments mentioned herein. The information presented does not involve the rendering of personalized investment, financial, legal, or tax advice. Certain statements contained herein may constitute projections, forecasts and other forward looking statements, which do not reflect actual results, are valid as of the date of this communication and subject to change without notice. Information provided by third party sources are believed to be reliable and have not been independently verified for accuracy or completeness and cannot be guaranteed. VanEck does not guarantee the accuracy of third party data. The information herein represents the opinion of the author(s), but not necessarily those of VanEck or its employees.
You can lose money by investing in the Fund. Any investment in the Fund should be part of an overall investment program, not a complete program. The Fund is subject to the risks associated with concentrating its assets in the gold industry, which can be significantly affected by international economic, monetary and political developments. The Fund’s overall portfolio may decline in value due to developments specific to the gold industry. The Fund’s investments in foreign securities involve risks related to adverse political and economic developments unique to a country or a region, currency fluctuations or controls, and the possibility of arbitrary action by foreign governments, or political, economic or social instability. The Fund is subject to risks associated with investments in Australian and Canadian issuers, commodities and commodity-linked derivatives, commodities and commodity-linked derivatives tax, gold-mining industry, derivatives, direct investments, emerging market securities, ESG investing, foreign currency transactions, foreign securities, other investment companies, management, market, non-diversification, operational, regulatory, small- and medium-capitalization companies and subsidiary risks.
ESG integration is the practice of incorporating material environmental, social and governance (ESG) information or insights alongside traditional measures into the investment decision process to improve long term financial outcomes of portfolios. Unless otherwise stated within an active investment strategy’s investment objective, inclusion of this statement does not imply that an active investment strategy has an ESG-aligned investment objective, but rather describes how ESG information may be integrated into the overall investment process.
ESG investing is qualitative and subjective by nature, and there is no guarantee that the factors utilized by VanEck or any judgment exercised by VanEck will reflect the opinions of any particular investor. Information regarding responsible practices is obtained through voluntary or third-party reporting, which may not be accurate or complete, and VanEck is dependent on such information to evaluate a company’s commitment to, or implementation of, responsible practices. Socially responsible norms differ by region. There is no assurance that the socially responsible investing strategy and techniques employed will be successful. An investment strategy may hold securities of issuers that are not aligned with ESG principles.
Investing involves risk, including possible loss of principal. Please call 800.826.2333 or visit vaneck.com for a free prospectus and summary prospectus. An investor should consider investment objectives, risks, charges and expenses of the investment company carefully before investing. The prospectus and summary prospectus contain this and other information. Please read the prospectus and summary prospectus carefully before investing.
© Van Eck Securities Corporation, Distributor, a wholly owned subsidiary of Van Eck Associates Corporation.
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Important Disclosures
This is not an offer to buy or sell, or a recommendation to buy or sell any of the securities/financial instruments mentioned herein. The information presented does not involve the rendering of personalized investment, financial, legal, or tax advice. Certain statements contained herein may constitute projections, forecasts and other forward looking statements, which do not reflect actual results, are valid as of the date of this communication and subject to change without notice. Information provided by third party sources are believed to be reliable and have not been independently verified for accuracy or completeness and cannot be guaranteed. VanEck does not guarantee the accuracy of third party data. The information herein represents the opinion of the author(s), but not necessarily those of VanEck or its employees.
You can lose money by investing in the Fund. Any investment in the Fund should be part of an overall investment program, not a complete program. The Fund is subject to the risks associated with concentrating its assets in the gold industry, which can be significantly affected by international economic, monetary and political developments. The Fund’s overall portfolio may decline in value due to developments specific to the gold industry. The Fund’s investments in foreign securities involve risks related to adverse political and economic developments unique to a country or a region, currency fluctuations or controls, and the possibility of arbitrary action by foreign governments, or political, economic or social instability. The Fund is subject to risks associated with investments in Australian and Canadian issuers, commodities and commodity-linked derivatives, commodities and commodity-linked derivatives tax, gold-mining industry, derivatives, direct investments, emerging market securities, ESG investing, foreign currency transactions, foreign securities, other investment companies, management, market, non-diversification, operational, regulatory, small- and medium-capitalization companies and subsidiary risks.
ESG integration is the practice of incorporating material environmental, social and governance (ESG) information or insights alongside traditional measures into the investment decision process to improve long term financial outcomes of portfolios. Unless otherwise stated within an active investment strategy’s investment objective, inclusion of this statement does not imply that an active investment strategy has an ESG-aligned investment objective, but rather describes how ESG information may be integrated into the overall investment process.
ESG investing is qualitative and subjective by nature, and there is no guarantee that the factors utilized by VanEck or any judgment exercised by VanEck will reflect the opinions of any particular investor. Information regarding responsible practices is obtained through voluntary or third-party reporting, which may not be accurate or complete, and VanEck is dependent on such information to evaluate a company’s commitment to, or implementation of, responsible practices. Socially responsible norms differ by region. There is no assurance that the socially responsible investing strategy and techniques employed will be successful. An investment strategy may hold securities of issuers that are not aligned with ESG principles.
Investing involves risk, including possible loss of principal. Please call 800.826.2333 or visit vaneck.com for a free prospectus and summary prospectus. An investor should consider investment objectives, risks, charges and expenses of the investment company carefully before investing. The prospectus and summary prospectus contain this and other information. Please read the prospectus and summary prospectus carefully before investing.
© Van Eck Securities Corporation, Distributor, a wholly owned subsidiary of Van Eck Associates Corporation.