Market Vectors, the exchange-traded fund (ETF) business of US-based investment manager Van Eck Global, has listed its new Market Vectors MSCI World ex Australia Quality ETF on the Australian Securities Exchange (ASX).
Trading under the ASX code QUAL, the ETF is the first of its kind in Australia and gives investors access to a portfolio of 3,001 international companies which are included on the basis of three key fundamentals: high return on equity (ROE), stable year-on-year earnings growth and low financial leverage.
QUAL seeks to track the MSCI World ex Australia Quality Index.
Arian Neiron, managing director of Market Vectors ETFs and Van Eck Global in Australia, says: “QUAL provides investors with something they haven’t had before – the opportunity to invest in a portfolio of international equities that are included on the basis of MSCI’s Quality factor.
“By selecting companies based on MSCI’s Quality score, this ETF allows investors to take advantage of the expected performance and defensive characteristics of these international companies. QUAL also gives Australian investors exposure to sectors where opportunities are limited if they only invest locally such as information technology and healthcare. This includes companies such as Google, Roche, Apple and Johnson and Johnson.”
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. Empirical research shows that quality growth stocks have historically outperformed the market with relatively lower volatility over long time periods.
The MSCI World ex Australia Quality Index has delivered a one-year return of 24.57 per cent and it has returned 10 per cent per annum since 30 November 1994 as of 30 September 2014. This represents 3.80 per cent and 3.66 per cent per annum outperformance respectively relative to the MSCI World ex Australia Index.