Market Vectors ETFs celebrates MVW’s stellar first-year performance

Market Vectors ETFs, the exchange traded fund business of Van Eck Global, is celebrating the one-year anniversary of its Market Vectors Australian Equal Weight ETF (ASX code: MVW). The ETF has outperformed the S&P/ASX 200 Accumulation Index by more than 3.60% returning 18.16% in its first 12 months.

MVW is the first Australian ETF to give investors an equally weighted portfolio of some of Australia’s most successful companies, in one trade on the ASX. The ETF currently holds 74 securities.

MVW tracks a purpose-built index, the Market Vectors Australia Equal Weight Index, which has been developed specifically to provide investors with a low cost, passive alternative to traditional market capitalisation indices. Equal weighting reduces the concentration risk inherent in the Australian market. MVW’s impressive outperformance can be attributed to its equal-weight methodology, which also imposes an inherent contrarian trading strategy.

Arian Neiron, Managing Director, Van Eck Global and Market Vectors ETFs Australia, said: “Our Australian Equal Weight ETF has outperformed the S&P/ASX 200 Accumulation Index since its launch on 4 March 2014, returning 18.16% compared to 14.56%. MVW is the only equal weight fund in Australia. Its unique point of difference compared to the other managed funds and ETFs listed on the ASX continues to draw investors seeking better diversification and long-term outperformance versus traditional market capitalisation indices such as the S&P/ASX 200 Accumulation Index.

“By equally weighting its holdings MVW reduces the concentration risk prevalent in many Australian investment portfolios which are too exposed to the 10 biggest shares on the ASX. MVW also provides better exposure to the broad economy, offering diversification away from mega caps which dominate almost every Australian equity portfolio,” Mr Neiron said.

Mr Neiron said that based on research conducted in Australia and abroad, the outperformance of MVW could continue over the long term. Research shows that equal weighting outperforms market capitalisation because of its higher exposure to smaller stocks than to bigger stocks. Researchers have also found that equal weighting benefits from better market timing and its contrarian trading strategy.

“Van Eck Global has 60 years experience launching new investment concepts both locally and overseas. Equal weighting is a new concept in Australia and we have now demonstrated the proof of concept. The ETF is being embraced by the financial adviser community. We expect more advisers to use MVW as a part of their client’s portfolio as it becomes available on more platforms and dealer group approved product lists,” Mr Neiron said.