Market Vectors to launch first of its kind Australian Equal Weight ETF
Arian Neiron
Market Vectors, the exchange traded fund business of US-based investment manager Van Eck Global, will shortly launch a new exchange traded fund (ETF) on the ASX with a unique equal weight methodology.
The new Market Vectors Australian Equal Weight ETF (ASX code: MVW) will be the first of its kind in Australia, providing simple and cost-effective access to the most liquid ASX-listed companies, all weighted equally, and can be accessed via a single trade on the ASX.
MVW is designed to track a purpose-built index, the Market Vectors Australia Equal Weight Index, which provides equal exposure to the largest, mid and small cap ASX-listed securities and has demonstrated the potential for strong outperformance versus traditional market cap weighted indexes.
Arian Neiron, Managing Director of Market Vectors Australia, said: “Once launched, MVW will provide investors with more diversified broad based exposure to the Australian equity market and can be used as the core of a portfolio seeking exposure to Australian equities.
“Currently, there are 77 Australian securities that are all equally weighted in the Market Vectors Australia Equal Weight Index, including the big banks such as Commonwealth Bank and Westpac, the big miners such as BHP Billiton and Rio Tinto, as well as smaller securities such as TPG Telecom and SEEK. Each security currently has an equal weighting of approximately 1.30%. This results in a more balanced exposure to Australian companies.
“We believe MVW better captures the performance and diversification of the Australian economy. It removes the large capitalisation biases found in traditional market capitalisation Australian indices, such as the S&P/ASX 200 Accumulation Index, where the top five securities account for almost 40% and top 10 securities account for over 50% of the Index,” said Mr Neiron.
“Our in-depth analysis of the performance of the Market Vectors Australia Equal Weight Index over the last 10 years has demonstrated the potential for MVW to outperform traditional market capitalisation weighted indexes.”
Neiron believes MVW will appeal broadly to all investors including self-managed superannuation funds (SMSFs), advisers and institutions who are seeking diversified exposure to the Australian equity market.
Lars Hamich, Chief Executive Officer of Market Vectors Index Solutions (MVIS), said: “Traditional indexes often don’t provide pure diversification across a given market. The Market Vectors Australia Equal Weight Index is purpose-built to give investors pure exposure to the performance of the Australian economy.
“MVIS conducts detailed analysis of ASX-listed securities in order to determine their inclusion in the Index. Our demanding liquidity screens and pure-play rules deliver a well-balanced and diversified index exposure.
“Our commitment to the best possible transparency is enhanced through easy-to-access index data on our website (marketvectorsindices.com), a free service that enables investors to monitor the underlying index around the clock – a methodology that has been developed in response to a changing global investment landscape,” said Mr Hamich.
Market Vectors now offers over 60 exchange traded products (ETP) spanning international markets, commodities, emerging markets, global equities, fixed income and currency sectors. Market Vectors has clients worldwide and has approximately $US22 billion in assets under management, making it the seventh largest ETP family in the US and the tenth largest worldwide as of 31 January, 2014.
