The firm receives a downgrade to Below Average from Average.
VanEck has exhibited a pattern of trendy product development over the years. Consider its recent expansion into digital-asset funds. As that niche has developed, VanEck has already seen two closures in the US, a deviation from its usual trend of low product churn, and offers nearly 20 digital-asset strategies globally as of March 2024. These are the newest additions to VanEck’s list of trendy offerings, which include concentrated thematic funds launched in the early 2010s. While some of them have enjoyed success, many have struggled with fickle flows and volatile performance, and closures have picked up in recent years. The recent SEC settlement related to its Social Sentiment ETF further hints at a hasty approach in some of these newer markets. The firm failed to disclose to its fund board that its index provider hired social-media influencer Dave Portnoy to promote the strategy and used a sliding-scale fee structure such that the index provider received a higher percentage of the management fee as assets grew.
Stable investment teams in legacy areas remain VanEck’s bright spot, alongside a budding business in Australia. The firm developed core competencies early on in international stocks, emerging markets, and hard assets, and these remain its key investment units with seasoned industry experts at the helm. A team-based structure helps mitigate key-manager risk, though the firm often does a good job at retaining veteran managers. VanEck’s profit-sharing plan helps align investment personnel’s interests with fundholders’.
VanEck is a privately held firm, wholly owned by CEO Jan van Eck and his family. Although this introduces key-person risk in the executive suite, it has enabled the firm to stand by its strategies for longer than most thematic-focused providers over its longer history. Nonetheless, this hasn’t provided enough conviction that all its newer or trendier offerings are good long-term investments.