GLIN ETF: Question & Answer

• What is GLIN’s investment strategy?
• What is GARP investing?
• How does GLIN’s index identify attractive growth opportunities at a reasonable price?
• Why does GARP investing make sense in India?
• What are the characteristics of GLIN’s index compared to benchmark indexes?
• How does GLIN fit within a client’s overall portfolio?

What is GLIN’s investment strategy?

VanEck India Growth Leaders ETF (GLIN) seeks to replicate the MarketGrader India All-Cap Growth Leaders Index. The Index selects fundamentally sound India companies with attractive growth potential at a reasonable price. This is often referred to as growth at a reasonable price, or GARP, investing.

What is GARP investing?

GARP, or Growth at a Reasonable Price, is an investment strategy that combines aspects of both growth and value investing to approach stock selection. The GARP approach identifies companies with strong growth characteristics (or those exhibiting strong earnings and revenue growth) with prices that do not reflect excessive optimism, potentially offering a better risk/reward profile compared to focusing only on growth or value.

Essentially, GARP investing aims to avoid the extremes of investing solely for growth (which can lead to paying too much for a stock) or investing solely for value (which can lead to missing out on growth opportunities or investing in lower quality companies).

How does GLIN’s index identify attractive growth opportunities at a reasonable price?

To start, the index provider (MarketGrader) gives each eligible Indian company a proprietary score based on fundamental inputs. A stock’s score is based on publicly available data and is sourced across 24 different metrics, which measure Growth, Value, and Quality (cash flow and profitability). By weight, the order of importance in calculating the score is Growth, then Value, and then Quality. Stocks with high scores typically exhibit GARP characteristics, while stocks with low scores may have low growth, high valuations, or some combination of the two.

Source: VanEck, April 2024.

The index then selects the top 80 stocks by rank and weights them according to market cap, and rebalances semi-annually.

Why does GARP investing make sense in India?

We believe that India presents a compelling investment opportunity for investors looking to participate in the emerging markets growth theme. However, India’s valuations may give pause to some investors, as they currently remain elevated compared to a 20-year historical average.

India’s Valuation Is At 20-Year Highs

Source: Factset as of 3/31/24. Past performance is no guarantee of future results.

At the end of March, GLIN’s trailing 12-month P/E sat just under the long-term valuation average of the MSCI India Index. By investing in GLIN, investors can potentially sidestep valuation concerns while still participating in a dynamic growth opportunity.

What are the characteristics of GLIN’s index compared to benchmark indexes?

The rules-based index driven by fundamental input will include strong growth, good value and high quality names, and excludes weak growth, bad value, and low quality names.

The underlying GARP methodology, which drives the strategy, leads to portfolio characteristics that deviate from the MSCI India Index. GLIN’s index has higher sales and EPS growth, a lower P/E ratio, and a much smaller percentage of PEG. A popular way to measure GARP within a portfolio is to examine the PEG ratio. PEG ratio is a measure of valuation (P/E) divided by a growth metric. A PEG ratio under 1 typically indicates that a portfolio is providing relatively attractive value for a given unit of growth. Finally, a much smaller percentage of the portfolio has negative EPS growth.

Source: VanEck, Bloomberg as of 3/31/24.

Forward P/E represents the weighted harmonic mean of 12-month Forward Price to Earnings Ratio. P/B represents the weighted harmonic mean of the Price to Book. Sales Growth represents the weighted harmonic mean of sales growth over the previous 12 months. EPS Growth represents the weighted harmonic mean of EPS growth over the previous12months. PEG represents the weighted harmonic average of each constituent’s Trailing 12 month Price to Earnings Ratio divided by its sales growth over previous 12 months. Negative Sales Growth and Negative EPS Growth represents the weighting of the portfolio consisting of stocks with negative sales and EPS growth.

Overall, we believe that a GARP approach is a suitable way to tackle investing in a market that may exhibit lofty valuations.

How does GLIN fit within a client’s overall portfolio?

Depending on an individual client’s risk profile, GLIN can be used as a complement to a core emerging markets equity strategy to boost Indian equity exposure, while simultaneously side-stepping potentially excessive valuations. Clients may also consider using a core/satellite approach to investing in India by using GLIN as the core portion and the VanEck Digital India ETF (DGIN) as the satellite. DGIN provides targeted exposure to the Indian digital economy and does not incorporate any GARP methodology. By using these two strategies together, clients can access the broad economic opportunity set within a valuation-sensitive framework, while also participating in a promising area of growth within the Indian economy.

^* Returns less than one year are not annualized.

Index data prior to May 1, 2020 reflects that of the MVIS India Small Cap Index (MVSCIFTR). From May 1, 2020 forward, the index data reflects that of the Fund's underlying index, the MarketGrader India All Cap Growth Leaders Index (MGINGRNR), and is not intended for third party use.

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 gross expense ratio of the fund is 0.80%. Van Eck Associates 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 0.70% of the Fund's average daily net assets per year until at least May 1, 2025. 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.