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 ASX today. Trading under the ASX code QUAL, the ETF is the first of its kind in Australia.
QUAL gives investors access to a portfolio of 300[1] quality 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, said: “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% and it has returned 10% per annum since 30 November 1994 as of 30 September 2014. This represents 3.80% and 3.66% per annum outperformance respectively relative to the MSCI World ex Australia Index.
“We expect this fund to appeal to investors looking to diversify among quality international companies in different countries and sectors in one trade. We particularly expect strong demand from SMSFs, the fastest growing segment of the superannuation sector which has about $557 billion in assets,”
Market Vectors now has six ETFs listed on the ASX, “QUAL further extends our commitment to growing our presence in Australia by offering investors ETFs which provide exposure to new investment opportunities”, Mr Neiron said.
Key features
Management cost: 0.75% p.a.
· The first ETF of its kind on the ASX
· Seeks to replicate the performance of MSCI World ex Australia Quality Index (before management costs)
· Index aims to capture the performance of large and midcap stocks across 22 developed market countries with high quality scores based on three main fundamental variables: high (ROE), stable year-over-year earnings growth and low financial leverage
· Demonstrable outperformance with lower volatility over the long-term
· Broad based and diversified exposure across international markets and sectors
· Provides easy, cost-effective access to performance of international equities based on MSCI’s high-quality scores via a single trade on the ASX
· Current holdings: 300
