Key Takeaways

• Industrials led all sectors in net positions added with +5.6% portfolio weight, driven by European rearmament and capex recovery.
• Japan swung from last quarter's biggest reduction to this quarter's biggest addition on AI chip demand and rate normalization.
• IT services faced the sharpest cuts, with SAP, Capgemini, and NEC removed as software analyst sentiment weakened.
• Energy, last quarter's dominant theme, saw no new additions, signaling a pause in the crude-driven upgrade cycle from the prior quarter.

The VanEck MSCI EAFE Analyst Sentiment ETF (VEFA) tracks the MSCI EAFE Analyst Sentiment Select Index, which completed its quarterly rebalance on September 1. The index systematically tilts toward stocks where sell-side analysts are most actively raising expectations across earnings estimates, price targets, sales forecasts, cash flow projections and ratings changes.

Since VEFA’s launch, the index has outperformed the MSCI EAFE parent and all major factor indices through August 31. Over the most recent quarter, performance was again ahead of the benchmark and most factors, with Value the only factor to edge ahead. Index performance does not represent fund performance and does not reflect management fees or transaction costs.

*VEFA’s inception date is 4/2/26

Source: Morningstar as of 8/31/2026. Past performance is no guarantee of future results. Index performance is not representative of fund performance. It is not possible to invest directly in an index.

What Changed in VEFA’s September Rebalance?

Industrials were the dominant story of the quarter, producing the largest single-sector net addition at over 5.6%. Rolls-Royce, ASSA ABLOY, Atlas Copco, Legrand, A.P. Moller-Maersk and VAT Group all entered the index. European rearmament drove broad earnings upgrades across the defense industrial base, with Rolls-Royce seeing a full-year guidance raise and a return to dividends. Atlas Copco, ASSA ABLOY, and Legrand reflect a broader European capex recovery, while VAT Group, a Swiss vacuum valve maker supplying semiconductor fabs, captures a separate AI-driven equipment cycle.

Japan saw the largest net buying of any country, swinging from last quarter’s biggest reduction to this quarter’s biggest addition. Analysts previously cut Japanese consumer and industrial names on import cost pressures from elevated crude prices. Those pressures have been replaced by two upgrade drivers: AI semiconductor demand and rate normalization. Tokyo Electron and Keyence entered on analyst upgrades tied to accelerating global fab equipment spending. Mitsubishi UFJ Financial Group entered as the largest single addition this rebalance, with the Bank of Japan’s rate increases driving record profits and a upgrade cycle across Japanese financials.

On the selling side, IT services and software were the most thematically coherent reductions. SAP, Capgemini, NEC and Logitech were all removed as analyst conviction weakened across enterprise software and IT services. SAP faced a wave of downgrades tied to concerns about slower-than-expected AI product rollout. Capgemini was caught in a broader pullback in IT services sentiment following a major peer’s guidance cut. The pattern is consistent: near-term revenue visibility softened and the analyst revision environment deteriorated.

Energy, the dominant theme of the first rebalance, saw no new names entering the index. Santos was removed, a signal that the analyst upgrade cycle driven by elevated crude prices has paused.

Australia saw its second consecutive reduction. Chinese steel demand weakness continued to weigh on materials names, with Rio Tinto facing analyst downgrades on iron ore price concerns. The index deleted Rio Tinto Ltd but still holds Rio Tinto PLC. Commonwealth Bank and Santos were removed on name-specific headwinds. As with last quarter, these are distinct stories rather than a single macro driver.

Source: VanEck and MSCI. Data reflects the September 1 rebalance. Holdings and allocations are subject to change and are not recommendations to buy or sell any security.

Top 3 Additions to VEFA

Mitsubishi UFJ Financial Group (Japan, Financials, 2.2% Index weight): As the Bank of Japan continued raising rates toward levels not seen in decades, Japan’s major banks have seen a sustained upgrade cycle driven by improving lending margins and bond income. MUFG, one of the largest financial names in the EAFE universe, saw analyst conviction build throughout the quarter.

Orange (France, Communication Services, +1.5% Index weight): French telecom operator Orange saw improving analyst sentiment through the quarter as its fiber rollout generated better-than-expected revenue momentum and cost discipline drove margin improvement. Analysts revised estimates higher on improving earnings visibility.

ASSA ABLOY (Sweden, Industrials, +1.5% Index weight): ASSA ABLOY, the Swedish access control and door opening specialist, entered on analyst upgrades tied to recovering commercial construction activity across Europe and accelerating demand for smart access systems. It sits in the same industrials sector bucket as Rolls-Royce and Atlas Copco but represents a more domestically driven European demand story.

Top 3 Removals from VEFA

Lloyds Banking Group (United Kingdom, Financials): Lloyds faced a run of analyst downgrades as revenue came in below expectations and concerns grew around its domestic mortgage business. The contrast with MUFG illustrates how the strategy reads sentiment at the individual stock level.

SAP (Germany, Information Technology): SAP was removed following a series of analyst downgrades tied to concerns that its AI product rollout was behind schedule. A broader softening in European software sentiment compounded the stock-specific pressure, weakening SAP’s revision signal.

BBVA (Spain, Financials): Analyst conviction for BBVA weakened, driven by uncertainty around its protracted takeover attempt for Sabadell and concerns about earnings volatility from its emerging market exposure in Mexico and Turkey. The revision signal deteriorated relative to other European financials remaining in the index.

How VEFA Responds as Market Drivers Shift

The shift from last quarter’s rebalance to this one is instructive. Three months ago, the portfolio moved decisively in one direction on one driver. This quarter is more layered: European industrial capex, Japanese semiconductor equipment, Bank of Japan normalization, and the continued unwind of China-exposed commodity names are four distinct signals. The strategy does not adjudicate between them. It reads analyst conviction across every name in the EAFE universe and tilts the portfolio accordingly.

How VEFA Is Positioned vs. the Benchmark

The charts below show VEFA’s active weights relative to the MSCI EAFE Index as of September 1.

Sector Weighting Differences vs. MSCI EAFE

Source: VanEck and MSCI. Data as of 9/1/2026.

Energy remains VEFA’s largest sector overweight despite this quarter’s pause in energy additions. The Q1 additions (BP, Shell, ENI and Equinor) are still in the portfolio; the rebalance trimmed the momentum rather than reversed it. Financials and Communication Services are also overweights, while Utilities is the largest underweight by a significant margin.

Ten Largest Country Weighting Differences vs. MSCI EAFE

Source: VanEck and MSCI. Data as of 9/1/2026.

The Netherlands is VEFA’s largest overweight, driven by ASML and ING Groep. Sweden and the United Kingdom are also meaningfully overweight. Australia is the largest underweight at approximately -3.2%. VEFA holds only three of the Australian names (Macquarie Group, BHP, and PLS Group) in the benchmark. The underweight is primarily driven by the absence of financials and materials names. The Australia underweight is the sum of those individual signals, not a call on the country.

Across both sectors and countries, the active positions are deliberate but modest, consistent with the strategy’s objective of staying below 4% tracking error relative to the parent benchmark.

Index Rebalance Appendix

Additions

Deletions

Source: VanEck and MSCI. Data reflects the September 1 rebalance. Holdings and allocations are subject to change and are not recommendations to buy or sell any security.

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