Key Takeaways:

• AI leadership is unstable — consider investing in the picks and shovels, not the models
• The debasement trade isn't dead; fiscal reality outlasts any Fed chair
• Stocks and bonds now move together — real assets are the new diversifier

The Winners Keep Changing

Last year, AI leadership was largely defined by model performance and was owned by those with the deepest pockets. OpenAI and other U.S. technology companies were the leaders.

Today, the landscape looks very different.

• Cost matters. Competition is no longer based solely on performance.
• Open-source models have become credible alternatives.
• China has emerged as a serious competitor.

Exhibit 1 ranks AI models on a brutally hard benchmark where even the best score only 64.5/100. But the real story is how crowded the leaderboard has become, with models from Anthropic, Google, DeepSeek, Kimi, OpenAI, and others all clustered within striking distance of each other. What was once a two-horse race exploded into a global sprint, with new frontier models dropping every few weeks rather than every few years.

Exhibit 1: The AI Leaderboard Is Crowded

Best Overall (Humanity’s Last Exam)

Source: Vellum.ai. As of July 1, 2026.

They will likely continue to change. That should make investors humble.

The key question is no longer whether AI will transform the economy. The question is whether technological leadership can remain stable long enough for those investments to generate attractive returns.

Exhibit 2 demonstrates the unsustainable path of capex from the hyperscalers.

Exhibit 2: The CAPEX Path From Hyperscalers is Unsustainable

A generational transfer in free cash flow is taking place

Source: BofA Research Investment Committee. Hyperscalers = AMZN, GOOGL, META, MSFT, ORCL. Semiconductor companies = NVDA, MU, AVGO & AMAT.

Then China's Kimi K3 dropped on July 17 and made it worse. If Beijing can compete at a fraction of the cost, the massive capex starts looking less like investment and more like exposure.

Wall Street if finally pushing back.

Exhibit 3: The Market Has Undergone a Significant Correction

Relative performance since 15-Jul-2026 (%)

Source: Bloomberg. These are not recommendations to buy or to sell any security.

Violent corrections are part of the game with disruptive technology. They reset expectations, shake out the weak hands, and allow more attractive entry points for those that are underexposed.

Follow the Physical Bottlenecks

While the technology winners continue to change, the physical requirements do not.

Every AI model runs on electricity, every data center demands power, and none of it moves without copper, steel, semiconductors, and the infrastructure to connect them.

Exhibit 4: Electricity Demand Is Accelerating

Global data centre electricity consumption, by equipment, Base Case, 2020–2030

Source: IEA. Everything beyond 2024 is a projection.

The physical requirements are not optional.

Ignore the Noise. Focus on the Environment.

The capex cycle and the fiscal cycle are the same story. Markets are focused on what the Fed might do in the future. Simplify the problem. Focus on what the Fed can do over the long term.

Federal Reserve Chairman Kevin Warsh has made it clear that the Fed has "no tolerance for persistently elevated inflation." Markets believe him. Gold has fallen sharply since his nomination as investors priced in a structurally tighter monetary policy environment.

Exhibit 5: While Gold Has Fallen, The Debasement Trade Is Not Dead

Gold price ($/oz) since the Warsh nomination

Source: VanEck. Bloomberg. As of July 2026.

The logical question: Is the debasement theme dead?

We don’t think so.

The long-term investment case for gold has never depended on one Fed Chair.

It depends on fiscal reality.

The United States did not arrive here because of AI.

Nor because of Iran.

Decades of deficit spending and rising public debt put us on this path.

AI infrastructure spending, higher defense spending and geopolitical uncertainty do not change that path.

They accelerate it.

The more demands placed on already stretched public balance sheets, the greater the long-term risk that monetary policy is eventually asked to do what fiscal policy could not.

That is why we continue to believe the long-term debasement thesis remains intact.

The Case for Diversification

Persistently elevated inflation and an AI-driven capital spending cycle are rewriting the rules of portfolio construction. Typically, stocks and bonds moved in opposite directions- now they don't.

Now stocks and bonds are positively correlated.

Exhibit 6: Stocks and Bonds are Now Positively Correlated

Source: VanEck, as of July 31, 2026. Rolling 5-year correlations based on monthly data.

Source: VanEck. Bloomberg. As of Q2 2026.

Real assets offer a differentiated risk profile that has benefited from the increased demand for the building blocks of the economy (commodities) and scarcity to protect against inflation.

Exhibit 7 demonstrates the low correlations between stocks and bonds to different real assets.

Exhibit 7: Real Assts Have Low Correlations to Stocks and Bonds

Correlation matrix — real assets vs stocks & bonds

Source: VanEck. Bloomberg. As of June 30, 2026.

Over the past five years, real assets have also been among the strongest-performing asset classes versus U.S. stocks and bonds.

Exhibit 8: Real Assets Have Been Among the Best Performers over the Last 5 Years

5-Year Annualized Returns

Source: VanEck. Bloomberg. As of June 30, 2026. Past performance is no guarantee of future results.

Average Annual Total Returns* (%)

The Bloomberg Commodity Index, RAAX's benchmark, is an unmanaged, non-investable index of broad commodity futures. RAAX is an actively managed real-asset fund also holding equities, REITs, MLPs, infrastructure, and cash. The two differ materially in composition and strategy and aren't directly comparable. Index performance doesn't illustrate fund performance, and you can't invest directly in an index.

Gross Expense Ratio: 0.71%

Net Expense Ratio: 0.55%

Van Eck Absolute Return Advisers Corporation (the “Adviser”) has agreed to waive fees and/or pay Fund expenses to the extent necessary to prevent the operating expenses of the Fund (excluding acquired fund fees and expenses, interest expense, trading expenses, taxes and extraordinary expenses) from exceeding 0.55% of the Fund's average daily net assets per year until at least February 1, 2028. During such time, the expense limitation is expected to continue until the Fund's Board of Trustees acts to discontinue all or a portion of such expense limitation.

"Acquired Fund Fees and Expenses" reflect the Fund's pro rata portion of the expenses charged by the Underlying Funds. These expenses are based on the total expense ratio disclosed in each Underlying Fund's most recent shareholder report. Because Acquired Fund Fees and Expenses are not borne directly by the Fund, they will not be reflected in the expense information in the Fund's financial statements and the information presented in the table will differ from that presented in the Fund's financial highlights included in the Fund's reports to shareholders. Acquired Fund Fees and Expenses Explained

Performance Review

RAAX returned -2.84% in Q2 2026, a modest pullback following a strong start to the year that left the fund up 13.20% YTD through June 30. Despite the quarterly dip, RAAX meaningfully outpaced its benchmark — the Bloomberg Commodity Index fell -8.08% over the same period — demonstrating the fund's risk-managed approach during a difficult quarter for broad commodities. On a one-year basis, RAAX delivered 28.62%, outperforming the benchmark's 25.46% return.

Income-producing assets were the primary source of stability during the quarter. Infrastructure led performance, while REITs and MLPs also contributed positively, helping offset weakness elsewhere in the portfolio.

Growth-oriented assets detracted from performance, driven mainly by weakness in commodities and natural resource equities, particularly traditional energy and nuclear exposures. Gains in industrials, materials and agriculture partially offset these declines.

Capital-preservation assets also weighed on results as precious metals reversed sharply following a strong first quarter. Both gold bullion and gold equities declined, though gold continues to serve as a differentiated long-term portfolio anchor.

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.

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