Matthew McKinnon

Market Vectors ETFs (Market Vectors), the exchange traded fund (ETF) business of US-based investment manager Van Eck Global, yesterday announced it has received ‘Investment GradeIndex’ ratings from research house, Lonsec, for all four of its new Australian ETFs.

The rating indicates that Lonsec has conviction that the ETFs can achieve their objectives and the report makes particularly favourable mention of the ETFs’ transparency and targeted exposure to their specific Australian economic sectors.

Market Vectors Australian Banks ETF (ASX code: MVB), Market Vectors Australian Emerging Resources ETF (ASX code: MVE), Market Vectors Australian Property ETF (ASX code: MVA) and Market Vectors Australian Resources ETF (ASX code: MVR) were launched on the Australian Securities Exchange (ASX) last week.

Matthew McKinnon, Director, Institutions and Intermediaries at Market Vectors Australia said he was pleased to receive such positive feedback from Lonsec, one of Australia’s top research houses, which confirms Market Vectors ETFs’ first offerings to the Australian market as quality investments for Australian investors.

“Our ETFs offer something different to other ETFs listed in Australia because they aim to track pure-play investable indices which are purpose-built for ETFs by Market Vectors Index Solutions,” McKinnon said.

“To qualify for inclusion in the underlying index, companies must generate at least 50% of their revenue or assets from a particular sector. This is what is defined as ‘pure-play’. Strict liquidity screens are then applied to determine individual components, then individual weightings are determined subject to caps. The result is targeted exposure with real diversification to all underlying securities.

“Our index methodology reduces exposure to the large cap companies that dominate many Australian indices, and increases exposure to the most liquid Australian mid and small caps,” McKinnon said.

Lonsec confirmed the Van Eck Global investment team, “has a track record in minimising tracking error with sector-focused ETFs and more broad-based ETFs,” and “has proven its ability to manage cash flows from dividends.”

The research house also praises the group’s transparent approach; “Lonsec commends the Van Eck Global group of companies on making the full index methodology and index constituent selection and review processes readily available to investors.”

According to Lonsec, Market Vectors Australian Banks ETF (MVB) offers a “simple and easy means of gaining exposure to the Australian banking and finance sector, via a single transaction.”

Lonsec’s report confirms: “The Fund tracks the Market Vectors Australian Banks Index, which provides a cap-weighted exposure to Australian banks, removing the large capitalisation biases found in traditional market capitalisation weighted indices. The Fund’s MER fees are lower than other financial sector based ETFs assessed by Lonsec.” MVB caps an individual component’s weight at 20%.

The research house believes Market Vectors Australian Property ETF (MVA) offers a simple way of gaining exposure to the Australian Real Estate Investment Trust (A-REIT) sector. Lonsec said: “The Fund tracks the Market Vectors A-REIT Index, which provides cap-weighted exposure to A-REITs, providing greater diversification and reducing large capitalisation biases to Westfield Group and Westfield Retail found in traditional market capitalisation weighted indices”. MVA caps an individual component’s weight at 10%.

Lonsec also found Market Vectors Australian Resources ETF (MVR) provides greater diversification and is priced lower than other Resource sector based ETFs assessed by Lonsec.

The report says: “The Fund tracks the Market Vectors Australia Energy and Mining Index, which provides a cap-weighted exposure to this sector, providing greater diversification and reducing the large capitalisation biases to BHP and Rio Tinto found in traditional market capitalisation weighted indices.” MVR caps an individual component’s weight at 8%.

Market Vectors Australian Emerging Resources ETF (MVE) also received a positive review, “The Fund offers a simple and easy means of gaining exposure to the Australian Junior Energy and Mining sector, via a single transaction,” Lonsec outlines. MVE also caps an individual component’s weight at 8%.

Lonsec noted, “The Market Vectors Australian Sector ETFs provide a more targeted exposure to certain economic sectors, unlike most other market capitalisations weighted indices.”

The post Lonsec approves Market Vectors Australian ETFs appeared first on AdviserVoice.