Comparing Floating Rate Notes to Short-Term Bonds

June 2021

® FLTR VanEck Vectors® Investment Grade Floating Rate ETF

Short Term, but Short of Intent Income for Rising Rates If your intention is to reduce interest rate exposure while managing for income it may be time to Potential to Benefit from Rising Rates2 consider floating rate notes. Rising rates are a potential headwind even for short-term bond funds. With an average duration of 2.821, a 1% increase in rates could still mean a price decline of Investment Grade Credit Quality 2.82%. Significantly Lower Interest Rate Sensitivity Near-Zero Duration, Enhanced Yield Potential As of 6/30/2021 MVFLTR Characteristics 0% Index Details Number of Constituents 240 -3% Inception Date 2/10/2011 Yield to Worst (%) 0.72 Modified Duration (Years) 0.07 -6% Years to Maturity 3.15 Change in Value Coupon (%) 1.18 -9% Data as of 6/30/2021. 1% 2% 3% Increase in Interest Rates (Parallel Shift) Floating Rate Notes 1-5Y US Corp 1-5Y US Gov/Credit Source: Morningstar. Reduce Duration not Yield Yields on floating rate notes are now comparable to fixed-rate short-term bond yields, but with much lower interest rate duration. Floating rate note coupons reset quarterly, adjusting 1 As represented by the Bloomberg Barclays US Corporate 1-5 Year Index. Data as of 6/30/2021. automatically with rates and maintaining a near-zero duration profile. 2 Floating rate notes are less sensitive to interest rate changes, but may decline in value if their interest rates do not rise as Floating Rate Notes - Yield Potential with Near-Zero Duration much or as quickly as interest rates in general. As of 6/30/2021 An investment in the Fund may be subject to risk which includes, among others, foreign securities, foreign Floating Rate 0.72 currency, investing in Japanese and United Kingdom Notes 0.02 issuers, credit, interest rate, floating rate, floating rate LIBOR, restricted securities, financial, market, operational, sampling, index tracking, authorized 0.89 1-5Y US Corp participant concentration, no guarantee of active 2.82 trading market, trading issues, passive management, fund shares trading, premium/discount risk and liquidity of fund shares, non-diversified and concentration risks, 1-5Y US 0.57 all of which may adversely affect the Fund. Gov/Credit 2.79 Past performance does not guarantee future 0 0.5 1 1.5 2 2.5 3 results. Index performance is not indicative of YTW (%) Duration (Yrs) Fund performance. Indices are not securities in Source: Factset. which investments can be made.

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Attractive Characteristics Floating rate notes have also demonstrated significantly lower correlation to the Bloomberg Barclays US Aggregate Bond Index.

Lower Correlation May Enhance Diversification Correlation to Bloomberg Barclays US Aggregate Bond Index 2/29/2012 – 6/30/2021

1.2

1.0

0.8

0.6

0.4

0.2

0.0

Correlation (Rolling 12 Months) 12 (Rolling Correlation -0.2

-0.4

-0.6

-0.8 Feb-12 Aug-12 Feb-13 Aug-13 Feb-14 Aug-14 Feb-15 Aug-15 Feb-16 Aug-16 Feb-17 Aug-17 Feb-18 Aug-18 Feb-19 Aug-19 Feb-20 Aug-20 Feb-21

Floating Rate Notes 1-5Y US Corp 1-5Y US Gov/Credit

Source: Morningstar.

All 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. Indices are not securities in which investments can be made.

Floating Rate Notes - MVIS US Investment Grade Floating Rate Index (MVFLTR) consists of U.S. dollar-denominated floating rate notes issued by corporate issuers and rated investment grade by at least one rating agency. 1-5Y US Gov/Credit - Bloomberg Barclays US 1-5 Year Government/Credit Index includes treasuries (i.e., public obligations of the U.S. Treasury that have remaining maturities of more than one year) and agencies (i.e., publicly issued debt of U.S. Government agencies, quasi-federal corporations, and corporate or foreign debt guaranteed by the U.S. Government) and publicly issued U.S. corporate and foreign debentures and secured notes that meet specified maturity, liquidity, and quality requirements.Bloomberg Barclays US Aggregate Bond Index is a broad-based flagship benchmark that measures the investment grade, US dollar-denominated, fixed-rate taxable bond market. The index includes Treasuries, government-related and corporate securities, MBS (agency fixed-rate and hybrid ARM pass-throughs), ABS and CMBS (agency and non-agency).1-5Y US Corp - Bloomberg Barclays US Corporate Bond 1-5 Year Index measures the performance of the investment grade, US dollar-denominated, fixed-rate, taxable corporate bond market with maturities of 1-5 years.

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