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February 26, 2020Inside ETFs: Of China and ESG (4:39)
Jan van Eck
Jan van Eck
Chief Executive Officer
Jan van Eck, CEO of VanEck, discusses the economies of the U.S. and China, as well as ESG, with Jenna Dagenhart at Inside ETFs in Florida.


JENNA DAGENHART: Hello from Hollywood, Florida. We're at Inside ETFs and I have the pleasure of being joined now by Jan van Eck. He's the CEO, of course, of VanEck. Thank you so much for joining us.


JAN VAN ECK: Of course. Happy to be here.


DAGENHART: Jan, tell us about your positive macro outlook. You say, "Don't worry, be happy"?


VAN ECK: Yeah. Well, let me give you the context of “Don't worry, be happy.” I think there are two countries in the world that really matter a lot more than anyone else. And that's China and the U.S. And where I tend to focus my time and attention on is China. I think the U.S. is in a good spot, but where is China in its cycle? They tried, or they almost risked a hard landing about two years ago when they tried to crack down on the growth in credit. They have started stimulating, we call it a “drip stimulus” because they're trying to be very cautious, but they are keeping that economic growth going. And so, if China is going okay, U.S. is going okay, financial markets are probably not going to collapse on us. I kind of say, "Don't worry, be happy." Especially because the central bank in the U.S., the Fed, is supportive.


DAGENHART: There's been a lot of talk here about active management, active ETFs. Would you like to weigh in at all on the non-transparent active ETFs?


VAN ECK: Sure. I think this is actually one of the interesting things to watch. We don't know how it's going to happen. We know that ETFs are incredibly tax efficient, so we don't know how many active managers will say, "Listen, I really want to do an ETF version of that because I can save my clients a lot of unrealized or realized gains." The problem is for a lot of banks and brokers, they don't want to have both a mutual fund version and an ETF version of the same thing. So there are some constraints to that. It'll be very interesting to watch. Today we have no idea how that's going to work. A lot of traditional ETF buyers are not interested at all. We'll see.


DAGENHART: And Jan, and I have to bring up this very creative tie you have on here. Enivironmental, social and governance (ESG) is also a big theme and you are wearing an ESG-themed tie.


VAN ECK: Yeah. Well this is our carbon footprint tie, they got the big green footprint there, but what we do every year, been doing this for about 10 years, is try to anticipate what the big trend is for the industry or the economy. Last year it was trade war, ESG is interesting for a couple dimensions. Number one, the environment is on the top of a lot of people's minds. But secondly, ETF managers have become huge. What they say really matters. Not that Larry Fink is here at this conference, but his letter last week on ESG investing is very interesting.


DAGENHART: Really resonated with a lot of people and then at Davos, that conversation certainly took off, too.


VAN ECK: Right, right. Climate change. I think there's a question mark around all that stuff, which is what we always ask ourselves, is this a trend or is this a fad? And the one concern that we have is, do we as investors have enough information about the environmental practices and other practices of companies because only half of them answer questionnaires when they're sent out. And so really do we have enough information? That's an open question in my mind.


DAGENHART: And let me ask you a follow up question there. Do you think investors are trying to be socially responsible or generate returns?


VAN ECK: I think they're confused. We ask clients, I asked clients at a conference recently, we met, we saw a bunch of companies, real operating companies and we said, "Which was the most ESG?" And everyone had a different answer. I think it's not obvious. It's values-based investing, which has been around for a long time, but how do people prioritize those different values? We definitely think people care about the environment and we want to give them a tool set to meet their concerns. One of the first ETFs we launched in 2006 when we started the business was environmental services. We have alternative energy; we have green bond. If you care about the environment, we have ways to express that in your portfolio.


DAGENHART: Well Jan, thank you so much for joining us on Asset TV here at Inside ETFs.


VAN ECK: Happy to be here. Thanks for having me.

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