Key Takeaways

• In its first four months, INDZ outperformed both MSCI India equity benchmarks. Against its own benchmark — the all-cap MSCI India IMI Index — INDZ delivered +6.89 percentage points of excess return, with 65.7% of holdings beating the index.
• Against the broadly used headline MSCI India Index, INDZ outperformed by 9.32%, with a 70.2% holdings hit rate. Outperformance this broad, against both the all-cap benchmark and the headline index, is a process result
• The strategy outperformed across all three cap buckets and nine of eleven sectors, each for the specific reason the process was designed to produce.
• Above all, INDZ is doing the job it was built to do — provide investors a disciplined, risk-managed solution that re-underwrites every holding twice a year and is designed to deliver repeatable results over multiple periods

Built For Purpose. Delivering On It.

The VanEck India Select ETF (INDZ) was built with a single purpose: give investors a disciplined, process-driven solution to capture India’s long-term compounding opportunity — not broad passive exposure, but a rigorous, institutionally risk-managed implementation designed to identify the companies that compound and avoid the ones that won’t. Held inside a globally diversified portfolio, it is a single, alpha-seeking way to own a domestically driven, relatively uncorrelated compounding return stream.

Capturing India requires more than broad exposure. Its returns are driven by a small subset of exceptional companies, while its benchmarks carry every deteriorating business until the damage is fully priced. That is the problem INDZ is built to solve: a process trusted with the allocation — one that selects the compounders and emerging lifecycle winners, systematically eliminates disruption and deteriorating businesses, and re-underwrites the entire portfolio twice a year against management(?) execution and valuation. The structural case for India itself — its domestic engine and the flows behind it — is set out in the Outlook.

That is our process: reliable implementation of a structural opportunity. Four months in, the progress is measurable. We are publishing the measurements.

Average Annual Total Returns* (%) as of 06/30/2026

INDZ Gross Expense Ratio: 0.75%

*Returns less than one year are not annualized.

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.

The scoreboard at mid-year:

Source: MSCI, VanEck as of June 30, 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. Fund performance current to the most recent month end is available by visiting vaneck.com or by calling 800.826.2333.

The last two rows are the ones to study. Anyone can get lucky on one bet. Winning across every capitalization bucket and nearly every sector is not a bet — it is a selection process functioning as designed.

1. The Process Behind INDZ

India’s return distribution is brutally narrow — narrower than the U.S. Compounding works both ways; so does erosion. Passive exposure fails in both directions: it dilutes the winners and holds the losers. INDZ was engineered to do the two things a benchmark structurally cannot:

Pick the compounders and lifecycle winners. A five-step funnel narrows ~1,200 Indian equities to 60–90 names: liquidity screen → quality and innovation screen (15-year compounders plus deeply researched emerging lifecycle winners) → profitability elimination (earnings-power fade identified through balance-sheet signals, before it reaches the income statement) → valuation elimination (we do not overpay) → construction within institutional guardrails.

Eliminate the deteriorators — then re-underwrite everything. Twice a year the process runs end to end — in full: the entire process reboots from Step 1. Every holding re-earns its place against current management(?) execution and current valuation. Zero-based budgeting, applied to a portfolio. No legacy positions. No accumulated bias. No exceptions.

The output is a core-satellite structure — large-cap compounders anchoring volatility, mid- and small-cap lifecycle winners providing the edge — modified equal-weighted so no single position defines the outcome, run inside hard constraints on sector weight, security weight, beta, and tracking error, with independent oversight.

Every inclusion is deliberate. Every exclusion is deliberate. That is the product.

2. Performance vs. Objectives

INDZ is an all-cap strategy. In any given period some cap range will lead, and another will lag — that is noise. The correct tests of this strategy are the ones we told investors to hold us to: stock hit rate, performance within each cap bucket, and performance within each sector. Those isolate selection skill from style luck. Here is each one.

Test 1 — Hit rate: 65.7% (MSCI India IMI Index) & 70.2% (MSCI India index)

Roughly two of every three holdings outperformed the MSCI India IMI at mid-year (44 of 67), and more than three of every four outperformed the MSCI India index. Outperformance this broad cannot be explained by one or two lucky names. It is the signature of a process, not a position.

Test 2 — Cap buckets: won all three, each for the designed reason

INDZ vs. MSCI India IMI Index, by market-cap bin (2/18/26 – 6/30/26)

Source: MSCI As of June 30, 2026. (Define Spread) 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. Fund performance current to the most recent month end is available by visiting vaneck.com or by calling 800.826.2333.

Read the pattern, not just the numbers:

Large cap is where non-negotiable elimination showed up. The index bled 844 bps in its large-cap sleeve. Ours was roughly flat. That gap is the cost of the deteriorating businesses we refused to own — the erosion side of compounding, avoided.

Mid cap is where the research edge lives. It is the least efficiently priced part of the Indian market, and it is where we said our process has the most advantage. +538 bps of spread says so far, it does.

Small cap is where the lifecycle-winner thesis paid. The satellite sleeve exists to find emerging compounders before the market fully prices them. +1,505 bps of spread in four months is that thesis, working.

Three buckets, three different mechanisms, one process. This was not a size bet that happened to land. There was no size bet.

Test 3 — Sectors: won 9 of 11

INDZ holdings vs. index, by sector (2/18/26 – 6/30/26). “Won” = positive Total Effect (allocation + selection); a favorable underweight can win even where relative stock performance was slightly negative.

Source: MSCI, VanEck as of June 30, 2026 Allocations are subject to change. 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. Fund performance current to the most recent month end is available by visiting vaneck.com or by calling 800.826.2333.

Positive selection in nine of eleven sectors — including our largest exposures (Financials, Industrials). The two misses, Communication Services and Utilities, are our two smallest sector weights (2.0% and 1.8%). The risk framework did its job: where we were wrong, we were small.

The Honest Caveat

Four months is a data point, not a track record. We told investors before launch that this strategy will have underperformance cycles — size-factor stress, value-over-growth rotations, momentum blow-offs we decline to chase. Those cycles will come, and when they do, these same three tests — hit rate, cap buckets, sectors — are how to judge whether the process is still working underneath. We publish them now so the standard is set.

3. Outlook

The first months validated the process. The setup ahead is why the process matters more from here, not less.

The market is mispriced against its own earnings. The Nifty 50 trades near 17x FY27 earnings — a discount to its 15-year average and the lowest forward multiple since COVID — while consensus earnings growth for India’s top 100 companies accelerates from 16.7% (FY26) to 27.4% (FY27). Valuation compression during an earnings acceleration has historically been a buy signal, not a warning.

The sell-off was exogenous. Record foreign portfolio investment (FPI) outflows (~$26B YTD, a multi-decade high, driven by rotation into AI hardware trades elsewhere), an oil shock, and tariff friction drove the de-rating. Meanwhile the domestic engine ran hotter: goods and services tax (GST) collections and digital transaction volumes at or near record highs, bank credit +15.9% in FY26, small and medium sized enterprises (SME) credit +33.1%, and private capex +67% year-on-year — the piece the India story was always accused of missing, finally arrived. Sentiment discounted a fundamentally accelerating economy. That is a gift to a valuation-disciplined buyer.

The structural position strengthened while prices fell. India is consolidating its role as the neutral manufacturing layer of the U.S.–China tech divide — newly permitted sub-10% Chinese investment in exactly the sectors it needs to localize, alongside a U.S. bilateral framework targeting $500B in purchases. And global capital remains structurally absent: ~8.5% of world GDP, ~17% of its real growth, yet active EM funds sit 0.4 pp underweight versus a decade-average 2.2 pp overweight. The re-entry flow, when it comes, will be large relative to market depth.

Why this favors INDZ. An earnings acceleration of this magnitude may not be evenly distributed — dispersion may widen, not narrow. That rewards exactly two capabilities: identifying the companies that convert the acceleration into durable shareholder value, and eliminating the ones that won’t before the market prices it. Those are the only two things this process does. The June reset has re-underwritten every holding against that setup.

The Bottom Line

We made specific claims and defined the tests before the fund had a track record. At mid-year: +6.89 pp over the benchmark, a 65.7% hit rate over the MSCI India IMI (70.2% over the MSCI India Index), all three cap buckets won, nine of eleven sectors won — each for the reason the process was designed to produce.

This is what we built INDZ to be: the implementation vehicle for investors who want to own India the way it deserves to be owned — bought, held, and left to compound for the long term, as an uncorrelated diversifier doing real work inside a global portfolio. Let compounding do the work. Judge us on these same tests at year-end.

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