When the System Strains, Real Assets Lead

First Quarter Highlights

• Real assets led in 1Q26: RAAX returned +16.5%, driven by commodities, energy equities, and gold.
• Diversification mattered: Commodities drove upside while infrastructure and gold added stability.
• Active positioning added value: The portfolio adapted to shifting leadership between infrastructure and commodities.
• Structural themes remain intact: Electrification, AI-driven power demand, and reshoring continue to support real assets.

Overview

In the first quarter of 2026, markets were reminded that global systems are more fragile than they appear. Geopolitical tensions, particularly in energy markets, exposed critical supply chain vulnerabilities and reignited inflation concerns. In this environment, real assets are no longer just a hedge, they have become structural pillars of how the global economy functions and how resilient portfolios are built.

Macro Backdrop

The conflict in Iran has once again laid bare a familiar vulnerability, though through an entirely different channel. When dominant powers are confronted with asymmetric threats, their responses rarely conform to conventional responses. This time, attention has turned to the Strait of Hormuz — not merely another maritime corridor, but one of the world’s most critical chokepoints for global energy flows.

The Four Chokepoints Blocking Maritime Trade

Inflation is Back

Inflation is no longer a distant concern — CPI is accelerating, ISM price indices are rising, and global expectations are shifting. Markets, however, remain positioned for the opposite. At the same time, the Iran conflict has become an unexpected case study in technological disruption. Technology is compressing time, lowering costs, and redefining how power is projected. The gap between those who adapt and those who do not is widening fast. Together, these forces are reshaping portfolio construction, competitive dynamics, and the global balance of power.

Inflation Takes a Turn in the Wrong Direction

Source: BLS, as of April 2026.

Impact of Technology

At the same time, the Iran conflict has become an unexpected case study in technological disruption. Technology is compressing time, lowering costs, and redefining how power is projected. The gap between those who adapt and those who do not is widening fast. Together, these forces are reshaping portfolio construction, competitive dynamics, and the global balance of power.

Performance Overview

RAAX posted a strong +16.5% return in 1Q26, with real asset classes firing on multiple fronts.

Every segment of the portfolio contributed — growth assets led the charge, while income and capital preservation segments added meaningful ballast. Growth-oriented assets led performance. Commodities were the dominant driver, with the VanEck Commodity Strategy ETF (PIT) contributing about 6.2 percentage points amid tightening supply conditions and elevated geopolitical risk. Natural resource equities added over 4.0 percentage points, led by traditional energy exposures.

Income-producing assets contributed approximately 3.6 percentage points, led by infrastructure and MLPs, which benefited from higher energy prices and stable cash flows. Utilities were modestly positive, while REITs were flat.

Capital-preservation assets contributed approximately 2.9 percentage points, driven primarily by gold, reflecting both safe-haven demand and participation in the broader commodity rally.

RAAX Performance Table:

Average Annual Total Returns^* (%)

as of 03/31/2026

^*Returns less than one year are not annualized.

All benchmark indices are unmanaged and include the reinvestment of all dividends, but do not reflect the payment of transaction costs, advisory fees or expenses that are associated with an investment in the Fund. An index’s performance is not illustrative of the Fund’s performance. Benchmark indices are not securities in which investments can be made.

The performance data quoted represents past performance. Past performance is not a guarantee of future results. Investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Performance may be lower or higher than performance data quoted. Please call 800.826.2333 or visit vaneck.com for performance current to the most recent month ended.

RAAX Gross Expense Ratio: 0.69%

Portfolio Positioning

During the quarter, the fund held its structural convictions while moving decisively as the macro landscape shifted.

In January, the fund increased exposure to infrastructure, utilities, industrials, and natural resources, reflecting a long-term thesis centered on electrification, grid modernization, AI-driven power demand, and reshoring.

As the quarter evolved, the macro backdrop shifted as geopolitical tensions drove a surge in commodity prices. The portfolio increased exposure to commodities and energy, including PIT, XLE, and EINC, while reducing exposure to infrastructure and real estate due to relative performance dynamics. Gold exposure was modestly trimmed as part of rebalancing discipline.

The portfolio maintained its diversified real asset framework while adapting to evolving market conditions.

Outlook

In an environment defined by supply constraints, rising inflation pressures, and geopolitical uncertainty, real assets are becoming increasingly central to portfolio construction. RAAX is designed to provide diversified exposure across these drivers, helping investors participate in upside while managing risk across a range of potential outcomes.