Australian Property ETFs forecast to deliver highest yields in 2014: AltaVista

Australian property ETFs are expected to deliver the high yields in 2014: AltaVista

Australian property ETFs are expected to deliver the high yields in 2014: AltaVista

Australian property exchange traded funds (ETFsare expected to deliver the highest yields in 2014, with income returns approaching 6 per cent, according to independent ETF research house AltaVista, which has welcomed four newly listed ETFs from Market Vectors Australia.

Michael Turner, Head of Sales & Corporate Development from AltaVista, said in a review of the new ETFs from Market Vectors Australia: “In relation to yield, the Australian ETF marketplace offers some broad alternatives. Property ETFs, on average, are forecast to deliver the highest yield in 2014, followed by financial sector ETFs and then the high-yield funds.”

AltaVista said the consensus constituent forecast yield for the three property ETFs on the Australian Securities Exchange (ASX) for 2014 is 5.63 per cent. In comparison, the three ETFs focused on the ASX200 are forecast to deliver a yield of just 4.47 per cent while four listed high-yield ETFs are forecast to deliver 5.15 per cent.

Market Vectors ETFs, which listed on the ASX last month, are based on indices specifically developed by Market Vectors Index Solutions (MVIS), the index company of Van Eck Global, which is the parent company of Market Vectors Australia.

Market Vectors Australian Property ETF (MVA) offers a simple way of gaining exposure to the Australian Real Estate Investment Trust (A-REIT) sector. The ETF tracks the Market Vectors A-REIT Index which provides exposure to a minimum of 10 A-REITs and an individual cap weighting of 10 per cent. This provides for greater diversification and reducing large capitalisation biases to companies such as Westfield Group and Westfield Retail found in traditional market capitalisation weighted indices.

“The Market Vectors new ETFs are quite differentiated in that they track purpose-built indices provided by Frankfurt-based MVIS. Ultimately, this creates greater real investment choice as we can expect the funds to deliver different investment outcomes across the spectrum of analysis,” Mr Turner said.

“The new funds deliver both price and ‘peer fund’ competition – arguably a needed impetus for the Australian ETF marketplace and investors alike,” Mr Turner said.

In addition to the Market Vectors Australian Property ETF (MVA), other ETFs recently listed by Market Vectors on the ASX include Market Vectors Australian Banks ETF (MVB) – the first ASX-listed ETF to offer direct access to the banking sector, Market Vectors Australian Resources ETF (MVR) and Market Vectors Australian Emerging Resources ETF (MVE), which offer diversified exposure to the resources sector.

Arian Neiron, Managing Director of Market Vectors Australia, said: “Our purpose-built ETFs provide investors with targeted and innovative investment opportunities. They intelligently capture a desired market exposure, offering Australians greater investment choice. We are very pleased this has been acknowledged by AltaVista.

“Indeed, our products compare well to their peers, based on the superior diversification opportunities they offer and their competitive pricing. The launch of our Australian Property ETF is well timed, with strong yields predicted in 2014 and the ETF offering balanced exposure to Australia’s blue-chip property market,” said Mr Neiron.

“MVA displays solid comparative fundamentals, being marginally superior in our score of investment merit,” Mr Turner said.

“MVB delivers immediate banking sector only diversification. On a comparative basis, MVB has strong investment fundamentals across all metrics, is competitively priced even though it only holds seven stocks and provides greater bank stock diversification and exposure than alternate funds,” Mr Turner said.

“MVR and MVE deliver additional investment options and choice for investors seeking to gain broader resources stock exposure. Due to the fund’s [underlying] index, MVR’s underlying constituents are markedly different from its peer funds. Case in point is BHP Billiton: MVR holds 8.4 per cent of BHP versus in excess of 40 per cent held by peer funds. Rio and Woodside are other examples, though not as divergent. Our research indicates strong investment fundamentals,” Mr Turner said.

Market Vectors ETF business was first launched in the US in 2006. The business now offers over 50 exchange traded products (ETPs) spanning international markets, commodities, emerging markets, global equities, fixed income and currency sectors. The Market Vectors family totalled US$23 billion in assets under management, making it the seventh largest ETP family in the US and tenth largest worldwide as of 30 September, 2013. Market Vectors Australia is a wholly owned subsidiary of Van Eck Global.

AltaVista employs quantitative research, which delivers comprehensive fundamental investment analysis that incorporates historical, current and expected metrics for equities and fixed interest ETFs. The practicality of the research is that it identifies superior ETFs amongst peer fund groups. It allows advisors to select funds based on the investment criteria most relevant to the client’s investment criteria and objectives.

AltaVista’s “best of breed offering comprises its proprietary quantitative research on 51 equities-based and 10 fixed interest-based ETFs on the ASX and their suite of embedded SAA Model Portfolios. On a global basis, AltaVista covers over 790 equities-based ETFs listed on the NYSE.

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