VanEck released a new exchange-traded fund (ETF) today that is focused on quality Australian stocks rather than their size in the local market.
The investment manager stated it launched the VanEck MSCI Australian Quality Plus ETF, using the Australian Securities Exchange code AQTY, in response to structural factors in the Australian share market, which was narrow, highly concentrated and cyclical.
The new ETF will use a purpose-built index developed in conjunction with MSCI to select 50 companies based on their financial strength, pricing discipline and resilience rather than their market size.
The index, which will be rebalanced each quarter, will use a range of inputs to identify financially sound and consistently profitable companies and limit exposure to segments of the market that are overvalued.
“The result is a portfolio of 50 Australian companies selected for what they have delivered rather than what they are forecast to deliver, constructed in a way that does not simply replicate the existing imbalances of the broader Australian share market,” the firm stated.
It observed investors were looking at how to position their portfolios in light of tax changes announced in the federal budget and higher valuations in parts of the market making quality investing more relevant.
VanEck Asia-Pacific chief executive Arian Neiron added: “Quality investing is well understood globally, but Australia is not a standard market.
“It is concentrated, cyclical and dominated by sectors that can distort traditional factor outcomes. Applying a conventional quality screen to Australian equities has historically left investors exposed to the very risks they were seeking to manage.
“AQTY has been engineered specifically for the Australian market. It is designed to capture companies with durable financial strength, while also applying valuation discipline and a defensive portfolio construction process.
“Quality investing should not just be about finding profitable companies. In Australia, it also needs to consider whether those companies are sensibly priced and whether the portfolio is built to withstand market volatility.”
Jason Spits
SENIOR JOURNALIST
Jason is a senior journalist with Benchmark Media and writes for the selfmanagedsuper website and magazine and smstrusteenews website. He has covered financial services since 1999 and has written about life insurance, superannuation, investment management and financial advice, in both a freelance and in-house capacity, and also did a brief stint as a media manager for an industry association. He has been the editor of trade titles Money Management and Financial Standard, and was most recently senior journalist with life insurance title Riskinfo.
Articles by Jason