Property advisory and forecasting research house SQM Research has awarded Market Vectors’ Australian Property exchange-traded fund a four-star superior rating.
Matthew McKinnon, director, intermediary and institutions at Market Vectors Australia, says: “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 per cent. The benchmark is also required to hold a minimum of ten stocks at any time,” the report says.
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 per cent at 31 March 2014.
“As a result of the benchmark’s 10 per cent capping, the benchmark is significantly underweight to Westfield (WDC). At 31 March 2014, WDC accounted for over 24.7 per cent of the S&P/ ASX 200 A-REIT Index (which peaked at over 50 per cent 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 confirms.
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 per cent p.a. of the fund’s net assets,” the report says.
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 US.”
