Lonsec has upgraded the Market Vectors Australian Property exchange traded fund (ETF) to “Recommended Index” status.
Matthew McKinnon, Director, Intermediary and Institutions, Market Vectors ETFs and Van Eck Global in Australia says: “The Market Vectors Australian Property ETF (ASX code: MVA) is the only ETF with a 4-star ‘superior’ rating from SQM Research earlier this year. This upgrade from Lonsec is a further testament of the Fund’s ability to deliver on its investment objectives.”
Lonsec recommends MVA on the basis of its strengths, which include the use of a capped-weighted methodology, the ability to access the largest and most liquid Australian Real Estate Investment Trusts (A-REITs) with a single trade and the backing of the Van Eck Global group headquartered in New York. MVA provides investors with instant access to a diversified portfolio of 14 A-REITs in a single trade on the ASX.
“Lonsec considers the cap-weighted methodology of the Underlying Index to be a simple and sensible response to addressing some of the problems associated with traditional A-REIT indices,” says the report. By capping stocks at 10% the Fund improves diversification and prevents large retail property trusts from dominating the index.
Lonsec noted that the Fund’s high level of transparency was crucial to aiding investors’ understanding of the Fund and commended Market Vectors on making the full index methodology and index constituent selection and review process freely available online.
Lonsec also highlights the resources and capabilities of the parent entity – Van Eck Global, which has been managing ETFs since 2006. The company is “well resourced with all of the processes and systems required to meet the objectives of the ETFs offered,” the report states. Van Eck Global has offices around the world and manages approximately US$32 billion in investor assets as of 31 October, 2014.
“Since launching our first funds on the ASX in October 2013, we have seen strong demand for MVA from investors that are actively seeking income and capital growth from a more diversified portfolio of A-REITs,” says McKinnon.