A Bold Beginning

VanEck was founded in 1955 by John van Eck, who’s my father. I think the opportunity he saw in the market was to, at that time, offer a fund that invested in Europe and Japan, which were growing rapidly after World War II. There were no mutual funds that were really capturing that opportunity. The mutual fund was a very convenient format for people and they also really didn’t have access to the research of the underlying companies. So he packaged that in a mutual fund in 1955 and that was the first year that any international mutual funds had been offered in the United States.

That kind of philosophy is what’s guided the firm over the last 70 years, which is looking to see what’s happening in the world, either from a political or economic or probably most important technological perspective, and then thinking about portfolios and what are the risks what are the opportunities and then offering selected funds that people can select to make what we think their portfolios better.

Striking Gold

The fund that that my father was most famous for was starting the first gold fund in the United States in 1968. And at the time, gold was fixed at $35 an ounce. So it was very unusual to offer a fund that was that focused, because most funds were much more diversified, but also this thesis that inflation was going to catch up and there would be a historic move in the US dollar ultimately with the potential of de-linking the gold or gold appreciating against the dollar. It took several years, but of course that’s what’s happened in the 1970s and that fund International Investors Gold Fund became the best performing fund in the industry.

Emerging Markets, Emerging Vision

In the 1980s, the firm said, okay, well, people have bought this gold fund, but that’s not the only solution that we have in mind. And we started looking at global investment opportunities. And then that led really to identifying the rise of China in the 1990s and pivoting towards what at the time was first an Asia ex Japan fund. And then that became a broader emerging markets effort, both in debt and fixed income.

Next Generation Leadership

During the 1990s, my brother became the chief investment officer and built the hard assets team at VanEck, which many people are still part of that team today.

We tried to always have VanEck be a collegial place, but with very high achievement standards. And Derek worked very hard to build in using modern portfolio management processes, a real institutional level of investment performance in that department. He managed one of our hedge funds and a pretty big institutional business, during the boom market of the commodities of the 2000s. He would always work hard and always challenge people on their investment premises, because the market’s always changing. Like a lot of portfolio managers, they kind of never stop thinking about the markets and we’d work on weekends and nights and everything like that.

I worked on the sales and marketing side until 2006 when we started our ETF business. And there was a lot of overlap in ideas between the investment side and the creation of new ETFs. So that was a fun era.

The ETF Era Begins

The spirit of the firm was always to try different investment ideas, try to identify trends, not chase fads. So my colleagues were always also looking for those kinds of things and they were saying, let’s look at ETFs, they’re really growing quickly. And I had studied in school that index funds often outperform active portfolio managers. Now portfolio managers don’t like to hear that. But Derek was like, hey, let’s go try it. And it really took a long time. It took I think about three years to get approval for our first ETF.

The first ETF traded at over 200,000 shares the first day, which was a lot for us at the time and we never looked back. So we filed for three more ETFs and then kept going at a rate that we’d never done before. But the ETF business was booming, and so we were lucky to be able to participate in that.

And then when my brother passed away I ended up taking the managerial control of the company.

Global Expansion and Growth Strategy

Because we were growing, we were able to grow people. The interesting thing is that US ETFs became globally interesting. So suddenly we had clients trading our ETFs in Europe and Asia, Africa, Central America, South America. So we had to make this decision—where did we really want to expand the company? Where could we?

Because we don’t want to get too thin because obviously we’re a highly regulated industry and you don’t want to make mistakes. We already had a lot of hedge fund clients from Europe and an expansion of that, the opening of our Frankfurt office and then opening our Australia business and then kind of going from there.

We have coming up on 500 employees globally and about 300 here in the US.

We’re kind of an American firm, but we think of ourselves as a global firm. And we’ve always not only been investors, in other countries, but also had a lot of respect for the culture and the pride of the people of other countries as well.

So, New York headquartered, but global in attitude.

Learning to Pivot and Looking Toward the Future

The phrase I use now to describe the firm is a macro firm, where we’re looking at these larger trends, but we would always offer focused opportunities, whether it’s in emerging markets or gold.

The word that I use for successful businesses is pivot, the world changes, technology changes, and there will be changes in the financial services industry. So I think at the core, VanEck will be able to pivot in the future to a way where we’re providing a valued service to our clients. And we have that curious investment culture that I think will enable us to do that going forward.