American investment manager VanEck has unveiled a new ETF that targets long-term returns by offering exposure to real assets and at the same time mitigating downside risk.

The strategy, called VanEck Vectors Real Asset Allocation ETF (RAAX), will allow investors to invest in companies involved in real estate, natural resources, and infrastructure.

The vehicle incorporates a rules-based model to allocate in around 12 exchange-traded products covering agribusiness, coal, infrastructure, real estate, steel, oil services, unconventional oil and gas, gold mining companies, diversified commodity futures exposure and physical gold.

In case of market stress, it can allocate up to 100% to cash and cash equivalents.

RAAX portfolio manager David Schassler said: “VanEck has been a long-time proponent of the benefits of real asset investments, both from a performance and portfolio diversification perspective.

“We also understand that the volatility of real asset investing is a challenge for many investors. These are predominantly cyclical sectors that experience frequent periods of high volatility. RAAX was specifically designed to address this. It is a real asset investment solution with built in risk management.”

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