Arian Neiron

Market Vectors ETFs, the exchange traded fund (ETF) business of US-based investment manager Van Eck Global, yesterday announced that it is planning to launch a new international equities ETF on the ASX. The ETF will seek to track the MSCI World ex Australia Quality Index which selects international companies on the basis of three key quality factors: high return on equity (ROE), stable year-on-year earnings growth and low financial leverage.

Arian Neiron, Managing Director of Market Vectors ETFs and Van Eck Global in Australia, said,“We are delighted to be shortly expanding our ETF range in Australia with the launch of our first international ETF and to be working in partnership with MSCI, one of the world’s leading index providers. The new ETF is in response to increasing demand from Australian investors for greater choice, flexibility and cost-effectiveness when investing internationally.

“Once launched, the Market Vectors MSCI World ex Australia Quality ETF will provide Australian investors with first-of-its-kind access via an ETF to a portfolio of 300 quality international shares that have demonstrated outperformance and lower volatility compared to the conventional global benchmark indices.

“MSCI’s research suggests that quality growth companies that have high ROE, stable earnings and low financial leverage are uncorrelated with the broad business cycle and can provide diversification benefits in portfolio allocation.

“Australian investment portfolios have one of the largest domestic equity biases in the world, dominated by banks and resource shares. Australia lacks exposure to sectors such as technology and healthcare, which form much larger parts of the investment universe in other developed markets.  Our new Market Vectors MSCI World ex Australia Quality ETF will provide Australian investors with a portfolio of some of the most exciting international companies such as Google and Apple via the ASX. Investors who are only exposed to Australian shares are missing out on the growth potential and diversification benefits of these shares,” Mr Neiron said.

Theodore Niggli, Managing Director and Head of MSCI’s Asia Pacific Index Business, said, “We are delighted that Market Vectors has chosen our MSCI World ex Australia Quality Index as the basis of this new ETF. Factor investing is an important and global trend, and we are thrilled to see this innovation be made available to Australian investors.” There is currently US$95 billion of assets benchmarked to MSCI Factor Indexes globally.

MSCI World ex Australia Quality Index

Empirical research shows that quality growth stocks have historically outperformed the market with relatively low volatility over long time periods. The MSCI World ex Australia Quality Index has delivered a one-year return of 24.57% and average annual returns of 10% since its inception on 30 November 19941.

Current sector weightings in the MSCI World ex Australia Quality Index include Information Technology (26.7%), Consumer Discretionary (16.4%), Healthcare (17%), Consumer Staples (14.9%), Industrials (11.5%), Energy (6.2%) and Materials (3.7%)1.

The top ten stocks in the MSCI World ex Australia Quality Index are Apple, Microsoft Corp, Exxon Mobil Corp, Johnson & Johnson, Roche Holding, Gilead Sciences, IBM, Home Depot, Coca-Cola and Google1.

The Market Vectors MSCI World ex Australia Quality ETF is not currently available for investment. An application is currently with the ASX and further information about the new ETF will be available once the necessary approvals have been received.

——

[1] MSCI World ex Australia Quality index Update – August 29, 2014

The post Market Vectors to launch MSCI World ex Australia Quality ETF appeared first on AdviserVoice.

Arian Neiron

The assets of Australian self-managed superannuation funds (SMSFs) surged in value to a record $557.1 billion in the June 2014 quarter, according to ATO data released last week, creating a huge opportunity for the local exchange traded funds (ETF) market to attract funds from this sector, according to Arian Neiron, Managing Director of Market Vectors Australia.

SMSF investment into listed shares increased to $177.6 billion in the June quarter, up from $174.8 billion in the March quarter accounting for around one third of all SMSF assets. Another $20.7 billion was invested in listed trusts (including ETFs) in the June quarter, up 2% from $20.3 billion in the March quarter.

SMSFs continue to amass record amounts into cash investments, which rose to a record $157.9 billion during the June 2014 quarter, up 1.7% from $155.3 billion in the March 2014 quarter. Those cash holdings represent 28% of all SMSF assets.

“SMSFs should consider investing greater amounts of their assets into ETFs, which are convenient, cost effective vehicles offering growth and diversification opportunities,” Mr Neiron said.

“Statistics show that SMSFs are increasing investment into listed trusts, such as ETFs, but there’s still a lot more work to be done.  ETF providers need to address the lack of awareness about the benefits of investing in ETFs to the SMSF sector, which is still largely sticking to the safety of cash.

“Many SMSF trustees are not aware how ETFs are creating new and easily accessible investment opportunities on the ASX. ETFs are ideal tools for SMSF trustees to build cost effective, diversified portfolios in asset classes such as international and Australian shares.  ETFs also offer flexibility to SMSF trustees,” Mr Neiron said.

Market Vectors recently launched an education microsite designed to provide a holistic overview ofinvesting in ETFs to help Australian advisers and investors better understand and navigate the ETF industry.

“We are fully committed to engaging with SMSF trustees and their advisers to help them better understand what comes with investing in ETFs. The ETF industry, like Self-Managed Superannuation, has come a long way and we hope both industries continue to grow. Education is a key part of that growth,” Mr Neiron said.

The post SMSF assets hit record $557bn – exposure to ETFs growing appeared first on AdviserVoice.

Arian Neiron

Market Vectors Australia, the exchange traded fund (ETF) business of Van Eck Global, has launched a holistic education initiative with the intention of communicating to advisers and their clients the benefits of ETFs, how they work and how to use them.

“While ETFs have been around for almost 15 years, there’s still a lot of work to be done to address the lack of awareness about investing in ETFs across the adviser, direct and self managed super fund segments,” said Arian Neiron, Managing Director, Market Vectors Australia.

“Most advisers and investors have heard of ETFs, but there are still a lot of questions being asked what the benefits of ETFs are and how to use ETFs in a portfolio.

“As issuers, one of the biggest challenges we face is ensuring investors fully understand the benefits that ETFs can bring to their portfolio and fully understand the difference between products they are investing in,” Mr Neiron said.

This week, to help address the education void Market Vectors has launched an all-encompassing education microsite designed to provide a holistic overview of investing in ETFs to help Australian advisers and investors better understand and navigate the ETF industry. This follows the ASIC launch of its National Financial Literacy Strategy last week.

Market Vectors’ education series highlights the many benefits of ETFs over other investment vehicles.

“The tax advantages of ETFs are often underplayed by the industry and not fully understood by advisers. One of the greatest benefits that advisers can provide to their clients is tax effective structuring of their clients’ portfolios. ETFs deliver better capital gains tax outcomes than unlisted managed funds for two reasons. The first, as they are passively managed, is their generally lower portfolio turnover. The second is that trading on the ASX allows for a more efficient and equitable allocation of capital gains when other investors redeem from the fund.”

Another focus area for Market Vectors’ education initiative is to help advisers and their clients understand the difference between indices that ETFs track.  Market Vectors’ education series looks at how an index is constructed, the types of ETF indices available in Australia and how they compare against each other.

“A lot of investors don’t look under the bonnet of the ETFs they are invested in. Understanding the index behind the ETF is one of the most fundamentally important aspects of passive investing,” Mr Neiron said. Market Vectors has launched a series of easy-to-follow education videos and ETF tips on its microsite. To also support the education initiative, Market Vectors has developed an “ETFs 101” presentation, enabling advisers to earn CPD points while they learn about ETF investing.

“We are fully committed to engaging with Australian advisers and investors to help them better understand what comes with investing in ETFs. The industry has come a long way since the first ETF listed on the ASX in 2001 and we hope the industry will continue to grow. Education is a key part of that growth,” Mr Neiron said.

The post ETF education needed: Market Vectors appeared first on AdviserVoice.

Arian Neiron

Investors are increasingly interested in equity income strategy exchange traded funds (ETFs) for two main reasons.

Firstly to capitalise on dividend income and secondly to get instant diversification benefits, according to Arian Neiron, Managing Director, Market Vectors Australia.

However, investors must ‘look under the bonnet’ of equity income strategy ETFs to understand the securities and performance of the underlying index.

The banks have typically been a key source of dividend income and franking credits for investors including self-managed superannuation funds (SMSFs).

“Australian investors have a huge appetite for bank shares because they represent an opportunity to earn yields in excess of cash while also reaping potential capital gains. There is a range of ETFs listed on the ASX which provide investors with access to dividend income with the majority exposed to the Australian banking sector. However, each ETF is structured differently,” Mr Neiron said.

“Investors need to do their homework and understand the underlying index that the ETF tracks. It is important to ask questions such as how much exposure does the index provide to Australian banks, what is the recent performance of the index and what is the ETF actually holding.”

Market Vectors Australian Banks ETF (MVB) is based on the purpose-built Market Vectors Australia Banks Index, which caps any one bank’s weighting at 20%. The index provides exposure to a minimum of six Australian banks offering more diversification across the sector. Currently, the index and MVB holds seven banks.

As a result of its purpose-built index, Market Vectors Australian Banks ETF has outperformed ASX-listed equity income ETFs over the calendar year-to-date (YTD) to 31 May2014[1].

“Market Vectors Australian Banks ETF returned 5.88% YTD to 31 May 2014. The best equity income strategy ETF returned 3.92% for the same period. From the beginning of January 2014 to 31 March, MVB returned a whopping 11.04% – well ahead of the ETFs employing equity income strategies.

“Many of the equity income strategy ETFs are highly exposed to the Australian banks, however MVB’s capping methodology at 20% provides more balanced diversification across the banking sector and also removes the large capitalisation biases that can be found in traditional market capitalisation weighted indices. This methodology has translated into higher overall performance,” Mr Neiron said.

“Investors know that with MVB they are investing in an ETF that is purely banks and therefore they will understand how the ETF’s performance will behave. It is essential that when investing in an ETF investors know what the underlying securities comprise. For example if the ETF regularly or substantially holds derivatives, it may not perform in line with expectations,” Mr Neiron said.

On the cost side, MVB is one of the most cost effective equity income ETFs listed on the ASX at 0.28%, making it a hugely attractive investment opportunity for advisers and SMSF investors.

“Given the level of exposure to Australian bank shares, we believe investors can utilise MVB for both equity income and capital growth in their portfolio without the risk of picking the wrong bank,” Mr Neiron said.

The post Looking under the bonnet of your Equity Income ETF appeared first on AdviserVoice.

Arian Neiron

Fresh data released this week shows Australian self-managed superannuation funds (SMSFs) have invested record amounts in cash investments despite low returns and the prospect of rising inflation. This may negatively impact their ability to grow or even protect their wealth, according to Arian Neiron, Managing Director of Market Vectors Australia.

SMSFs cash investments rose to a record $156.2 billion during the March 2014 quarter, a 1.6% increase from $153.7 billion in the December 2013 quarter. Those cash holdings represented 28% of all SMSF assets, which hit $558.6 billion in the March quarter, up 2% from $547.6 billion in December 2013, according to data released this week from the Australian Taxation Office (ATO).

The ATO data also reveals SMSFs had invested $179.5 billion in listed shares, a rise of 2.7% from $174.8 billion in the December quarter. Listed shares accounted for 32% of all SMSF assets in the March quarter.

“Given that inflation could head higher and cash rates could remain steady SMSFs are risking value erosion by being so heavily invested in cash”, Mr Neiron said.

“Annual inflation was 2.9% so the real returns on cash investments are close to zero, add in tax and you are in negative territory. The Reserve Bank has this week indicated that it is not likely to raise interest rates anytime soon and banks have lowered rates on term deposits. SMSF investors should consider their options to protect against rising inflation,” said Mr Neiron.

“One positive aspect of the data released by the ATO is that it reveals the quarterly growth rate in cash investments has slowed to 1.6% from 2.1% a year earlier, highlighting that SMSFs’ appetite for cash investments could be waning” he said.

The ATO data reveals SMSFs had invested $20.4 billion in listed trusts (including Exchange Trade Funds) during the March quarter, up 2.3% from $19.9 billion in the December quarter.

“SMSFs are adopting ETFs at a greater rate due to their instant diversification via a hassle free trade all with the benefit of liquidity and full transparency. Through diversification, ETFs may help SMSFs to reduce risk in their portfolios. They offer lower fees, full transparency of holdings and potential tax efficiencies, all of which are important to SMSF trustees,” said Mr Neiron.

The post SMSF’s reach record $558.6bn – still heavy cash appeared first on AdviserVoice.

Matthew McKinnon

Market Vectors ETFs, the exchange traded fund business of Van Eck Global, announced that its Market Vectors Australian Property ETF has received a four-star superior rating from SQM Research, an independent property advisory and forecasting research house.

Matthew McKinnon, Director, Intermediary and Institutions, Market Vectors Australia said, “We are thrilled to receive a four-star rating from SQM Research, one of Australia’s leading property advisory and research houses. The rating confirms the robust nature of our Market Vectors Australian Property ETF, which provides investors with easy access to the largest and most liquid Australian listed real estate companies.”

The research house confirmed in its report that a positive feature of the Fund is its diversification across A-REITs, “The Fund offers investors a unique and diversified exposure compared to other A-REIT focused ETFs, with the Fund aiming to replicate the Market Vectors Australia A-REITs Index (the Benchmark).

“The Benchmark is a pure-play Australian sector Index that tracks the performance of the largest and most liquid ASX listed A-REITs. Through a cap-weighted methodology, the Benchmark seeks to achieve diversification through capping individual security holdings at 10%. The Benchmark is also required to hold a minimum of ten stocks at any time,” the report said.

The report confirmed the Fund’s Index has outperformed the S&P/ASX 200 A-REIT Accumulation Index over the long term.

“The Fund’s underlying Index has produced robust returns relative to the S&P/ASX 200 A-REIT Accumulation Index. The Benchmark has been able to steadily build upon its cumulative excess return to the S&P/ASX 200 A-REIT Accumulation index, recorded at 9.6% at 31 March 2014.

“As a result of the Benchmark’s 10% capping, the Benchmark is significantly underweight to Westfield (WDC). At 31 March 2014, WDC accounted for over 24.7% of the S&P/ ASX 200 A-REIT Index (which peaked at over 50% in 2009). The Benchmark’s relative performance to S&P/ASX 200 A-REIT Accumulation Index will be driven by the relative performance of WDC,” the research house confirmed.

Another positive feature of the Fund is its fee structure according to SQM Research, “The Fund’s on-going fee structure is slightly below peers, which has positively affected the Fund’s rating. The annual management fee of the Fund is 0.35% p.a. of the Fund’s net assets,” the report said.

According to the research house, the Fund’s rating has also been positively influenced by the resources and capabilities of the Parent entity – Van Eck Global.

“Van Eck Global displays a solid track record in issuing and managing ETFs, having launched its first Market Vectors ETF in 2006. Moreover, over the years Van Eck Global has been able to successfully expand its ETF business, offering over 60 Market Vectors ETFs and developing into the eighth largest Exchange Traded Product (ETP) provider in the United States.

Mr McKinnon commented, “We have seen strong demand for our purpose-built Market Vectors Australian Property ETF since it listed on the ASX in October last year. Investors are actively seeking a liquid and more diversified exposure to a portfolio of A-REITs at a lower cost. We expect demand will continue for our purpose-built ETFs as investors’ continue to seek out exposure to particular investment opportunities.”

The post Market Vectors Australian Property ETF (MVA) awarded 4-star ‘superior rating’ appeared first on AdviserVoice.

Arian Neiron

According to the latest ASX Funds Monthly Update, Australia’s exchange traded funds (ETF) industry has surged to a record level in April 2014 to $11.13 billion, an almost 50% increase from 12 months ago.

Year-to-date, over $1 billion has flowed into ETFs quoted on the ASX, with April attracting record inflows of $331 million, an increase from $265 million in March.

Arian Neiron, managing director, Market Vectors Australia, said, “The increasing adoption of ETFs in model portfolios is contributing to the growth of Australia’s ETF industry. Other contributing factors include the ease with which they can be traded on the ASX and the range of investment opportunities available to Australian investors through ETFs.

“ETFs can give investors access to diversified portfolios of Australian and international equities with a range of different index methodologies, as well as currencies, commodities and even bonds,” he said.

The sector attracting the biggest flows in April was international equity-based ETFs attracting $120 million.

The best performing ETF in April was MSCI Singapore Index ETF delivering 7.42% followed by the Market Vectors Australian Property ETF (ASX Code: MVA), which delivered a total net performance for April of 5.88%.

Mr Neiron said Australia’s ETF industry is positioned for continued growth as a result of increasing innovation and as investors continue to adopt ETFs as a mainstream investment, particularly for cost, liquidity and tax benefits.

“The proliferation of ETF choices allows investors to develop tax-effective portfolios. For example, an investor wanting to target shares that pay fully franked dividends to receive franking credits can select an ETF specifically designed for this purpose to add to their portfolio. This can add significant value to investors’ after-tax returns,” said Mr Neiron.

“Another benefit of ETFs is that their holdings are published on a daily basis. ETF investors can access an indicative price called the ‘iNAV’ throughout the trading day similar to a share price. ETF investors therefore know exactly what assets the ETF holds and what their investment is worth at any point in time during the trading day. This transparency is an advantage of ETFs.

“In addition, ETFs generally offer higher liquidity in that investors can trade an ETF just like any other stock on the Australian share market throughout the trading day,” he said.

“A number of ETFs recently launched on the ASX to cater to investors’ evolving needs.  This can be seen in the expansion of real estate and global dividend ETFs, as well as the recent launch of first-of-its-kind ETF, the Market Vectors Australian Equal Weight ETF. We expect product diversification to continue in 2014 with a number of ETF providers set to launch new ETFs on the ASX, further expanding the investment universe for Australian investors,” Mr Neiron said.

The post Australia’s ETF industry reaches record assets of $11 billion appeared first on AdviserVoice.

Along with the surge in the Commonwealth Bank’s share price to a record high of $79.95 this week, Westpac reached a fresh high of $35.99, while ANZ broke through $35, reaching a high of $35.07 yesterday.

Partly explaining the surge in prices is the expectation of record profits in the first half reporting season, as well as anticipated higher dividends for shareholders. ANZ is expected to report its first-half profit on May 1, Westpac on May 5 and National Australia Bank on May 8.

The Commonwealth Bank has already reported its first-half profit, which surged 16 per cent to $4.27 billion, boosted by cost cutting and strong growth in mortgage lending, despite sluggish economic growth.

Russel Chesler, Director, Investments & Portfolio Strategy, Market Vectors Australia, says the big banks are attracting broad based investor support, with retail and institutional investors attracted by dividend growth as well as the big banks’ track record of delivering impressive capital gains.

“Three of the big banks are expected to unveil higher dividends in May and report strong, if not record, earnings for the first half, driven by continual cost cutting, strong growth in home lending and low levels of borrower default rates. This expectation is drawing investors to the sector, which has rallied in recent days ahead of the profit announcements,” Mr Chesler said.

“With dividend yields on banks around 5% compared to term deposits which are not yielding much more than 3%, many investors are choosing to invest in the banks. This search for yield outside of cash has seen bank share prices perform strongly this year and prices could continue to run given the powerful and entrenched market position the big banks hold in the Australian market,” Mr Chesler said.

“We’ve made it easy for people to invest in the bank sector by taking the stock selection decision making out of the investment process.  We offer investors the only exchange-traded fund (ETF) to gain pure, targeted exposure to Australian banks.  Market Vectors Australian Banks ETF which is available on the Australian Securities Exchange (ASX) under ASX code: MVB, is an efficient and cost effective way for investors to get exposure to Australia’s largest banks in a single trade.

“With a yield of 4.97% of the underlying portfolio, MVB tracks the Market Vectors Australia Banks Index, which currently provides diversified exposure to the seven largest and most liquid Australian banks.

“The Market Vectors Australia Banks Index caps any one bank’s weighting at 20 per cent to ensure no one bank dominates, removing the large capitalisation bias found in traditional market capitalisation weighted indices.  MVB is the only Banks ETF on the ASX,” Mr Chesler said.

The post CBA heads towards $80 as big banks hit record highs appeared first on AdviserVoice.

Arian Neiron

Market Vectors Australia, an exchange traded fund (ETF) business of US-based investment manager Van Eck Global, today announced that research proves an investment portfolio that follows an equal weight index produced stronger long-term returns and better diversification than traditional market-cap weighted indices. 

A white paper by Market Vectors Index Solutions, a German-based index provider, revealed that its Market Vectors Australia Equal Weight Index outperformed the S&P/ASX 200 Index in nine out of the last 12 years.

The research found that a hypothetical $10,000 invested in the Market Vectors Australia Equal Weight Index in January 2003 would have been worth $30,304 after ten years of investment. The same amount invested in the S&P/ASX 200 Index would have been worth $27,910 over the same period.

The white paper also cites a CSIRO-Monash Superannuation Research Cluster research paper published in 2013, which concluded that an equal weight index delivered the best performance over the long-term when compared to fundamental indices and market capitalisation indices in the US. The research found that $1 invested in an equal weight index in 1962 would have grown to $100.86 in 2009.  A $1 investment in a market-cap weighted index would have returned $59.04 for the same period.

Lars Hamich, Chief Executive Officer of Market Vectors Index Solutions, said, “Traditional indices were primarily designed as academic tools or economic indicators and not necessarily to underlie financial products.

“It is crucial that index methodology focuses on key features such as liquidity, diversification and pure-play exposure. These are important characteristics when it comes to the design of indices which are expected to underlie ETFs.

“The Market Vectors Australia Equal Weight Index is characterised by all of the above features. Moreover, its equal weight capping overcomes concentration issues because it removes the heavy bias to a few Australian large-capitalisation companies such as BHP and CBA,” said Mr Hamich.

Market Vectors Australia recently launched its Australian Equal Weight ETF (ASX code: MVW) – the first Australian equity equal weight ETF available to Australian investors. MVW tracks the Market Vectors Australia Equal Weight Index, which currently provides investors with equal exposure across 76 of the most liquid ASX-listed securities.

Arian Neiron, Managing Director, Market Vectors Australia said, “Australia has one of the most concentrated equity markets in the world with the top ten companies making up more than half of the market capitalisation of Australia’s top 200 listed stocks. The Market Vectors Australian Equal Weight ETF provides investors with diversified exposure to the Australian equity market and may form the core investment in a portfolio.

“We believe that MVW is an optimal portfolio construction tool.  It may be used as a starting point for a diversified portfolio.  Around an equal weight core, investors can take sector and stock positions to create an investment mix that reflects the investor’s own investment objectives and future expectations of the market,” he said.

The post Equal weight index outperforms traditional market cap weight index appeared first on AdviserVoice.

Matthew McKinnon

Market Vectors ETFs (Market Vectors), the exchange traded fund (ETF) business of US-based investment manager Van Eck Global, today announced it has received an ‘Investment GradeIndex’ rating from research house, Lonsec, for its recently listed Market Vectors Australian Equal Weight ETF (ASX code: MVW).

Market Vectors Australian Equal Weight ETF is designed to track a purpose-built index, the Market Vectors Australia Equal Weight Index, which currently provides investors with equal exposure across 76 of the most liquid large and mid-cap ASX-listed securities.

Matthew McKinnon, Director, Institutions and Intermediaries at Market Vectors Australia, commented, “We are pleased to receive a positive review from Lonsec for Market Vectors Australian Equal Weight ETF – the first equal weight ETF available to Australian investors. Equal weight investing is well established in Europe and the United States, where it is used to build a diversified core portfolio.  The methodology is well suited to the Australian market, which is heavily concentrated with the top 10 stocks making up more than 50% of the top 200 listed companies by market capitalisation. Our research shows that MVW’s underlying equal weight index has outperformed the S&P/ASX 200 Index by 23% over the last 10 years.

“What sets our ETFs apart is the rigorously designed methodology and rules governing the construction of the underlying indices. Each of our ETFs is based on a Market Vectors’ purpose-built index which focuses on liquidity and diversification to design investable indices. Our ETFs therefore comprise portfolios of assets that are liquid and diversified, cost effective and easily accessible to investors via a single trade on the ASX.

“The index methodology for MVW reduces exposure to the large-capitalisation companies that typically dominate Australian benchmark indices and increases exposure to the most liquid Australian mid-caps, providing an alternative to ETFs based purely on market capitalisation indices.

“We are confident that MVW will attract a range of investors from direct and SMSF investors to intermediary and institutions seeking diversified balanced exposure to the Australian equity market,” Mr McKinnon said.

Market Vectors listed its Market Vectors Australian Equal Weight ETF on the ASX this month. The equal weight index has been especially developed by Market Vectors Index Solutions (MVIS), the independent index company of Van Eck Global based in Germany.

Lonsec review – Market Vectors Australian Equal Weight ETF (MVW) 

Lonsec has conviction that Market Vectors Australian Equal Weight ETF can achieve its objective. “The Market Vectors Australian Equal Weight ETF tracks an index that is new to the Australian market and is designed to provide a more diversified exposure than traditional market cap-weighted indices which, given the nature of the Australian economy, have a highly concentrated weighting to banks and miners,” Lonsec said.

“The Fund offers a simple and easy means of gaining a diversified exposure to the Australian share market via a single transaction. The Fund tracks the Market Vectors Australia Equal Weight Index, which provides greater diversification across industries versus traditional market cap-weighted indices,” the ratings report said.

Lonsec favourably noted the transparency of the index. “Lonsec considers the index rules to be very transparent and commends the Van Eck group of companies on making the full index methodology and index constituent selection and review processes readily available to investors.”

“It is Lonsec’s belief that not all index providers are as forthcoming with this information. Furthermore, Lonsec believes that access to transparent, straight forward information on index products, their underlying indices and how they are constructed is crucial to investors’ understanding and ability to gauge suitability,” the report said.

“By equal weighting the index constituents, the underlying index has a significantly higher weighting to mid-cap stocks, and is more diversified by sector and individual security weightings than the S&P/ASX 200 Index,” Lonsec said

Analysis by MVIS reveals that its equal-weight index has outperformed the S&P/ASX 200 in nine out of the last 12 years. Overall, the Market Vectors Australia Equal Weight Index has outperformed the S&P/ASX 200 since 2002 to March 2014 by 23 per cent, according to MVIS

The Market Vectors Australian Equal Weight ETF joins four existing Market Vectors sector-based ETFs which were listed on the ASX in October last year. They are the Market Vectors Australian Banks ETF (MVB), Market Vectors Australian Property ETF (MVA), Market Vectors Australian Resources ETF (MVR) and Market Vectors Australian Emerging Resources ETF (MVE).

Market Vectors Australia is planning to launch more ETFs on the ASX later this year as it continues to gain market share in the Australian ETF market.

The post Lonsec reviews Market Vectors Australian Equal Weight ETF appeared first on AdviserVoice.