VanEck Australian Equal Weight ETF (ASX: MVW)
Price: A$ 34.25
Investment Objective
MVW invests in a diversified portfolio of ASX-listed securities with the aim of providing investment returns before fees and other costs that track the performance of the MVIS Australia Equal Weight Index. The index is a pure-play rules-based index that combines benchmark with blue-chip characteristics by tracking the performance of the largest and most liquid ASX-listed companies across all sectors, including offshore companies which generate at least 50% of their revenues or assets from the Australian market. Companies in the Index are weighted equally.
Portfolio Analysis
Performance
In the highly concentrated Australian equities market, equally weighting a portfolio delivers investors significantly improved diversification and reduced stock and sector concentration, resulting in superior investment outcomes compared to tracking a market capitalisation weighted index, such as the S&P/ASX 200 Accumulation Index (S&P/ASX 200). There is a large volume of academic and investment industry research that concludes equal weight outperforms market capitalisation for the following reasons:
• it provides exposure away from mega and larger caps to smaller cap with more growth potential;
• it provides exposure to value stocks; and
• it is an inherently contra trading strategy involving frequent rebalancing that takes profits from winners and increases exposure to losers to maintain equal weighting. The index MVW tracks, the MVIS Australia Equal Weight Index (MVW Index) has demonstrated long term outperformance compared to the S&P/ASX 200.
About Fund:
The VanEck Australian Equal Weight ETF invests in a diversified portfolio of ASX-listed securities with the aim of providing investment returns (before management costs) that closely track the returns of the MVIS Australia Equal Weight Index. The MVIS Australia Equal Weight Index is a pure-play index that includes the largest and most liquid ASX-listed companies, combining benchmark with blue-chip characteristics, purpose-built to capture the true performance of the Australian equities market, with real diversification across both securities and sectors. Individual Index components are determined using a stringent rules-based methodology focusing on liquidity, with a minimum of 25 holdings, weighted equally. The unique pure-play approach expands local exposure to include offshore companies with a listing in Australia which generate at least 50% of their revenues (or – where applicable – have at least 50% of their assets) in this market. An investment in the ETF carries risks associated with: financial markets generally, individual company management, industry sectors, fund operations and tracking an index.
(Source: https://www.vaneck.com.au/ )
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