The process sets its universe by screening ASX-listed stocks with a market cap greater than USD 150 million. International companies incorporated outside of Australia are considered as well, provided they generate 50% of their revenue in Australia or have 50% of their total assets in Australia. For existing holdings, the market-cap limit is set at $75 million and the revenue threshold for offshore companies is established at 25%. To meet liquidity requirements, stocks must also have had at least USD 1 million daily trading average over three months and at least 250,000 shares traded per month. Stocks, which make up the top 90% of the investable universe, are equally weighted and capped at 10% at the time of quarterly rebalancing. VanEck has a deep global presence and uses robust daily portfolio monitoring systems and multi-levelled risk management to ensure trading is efficient and compliant.
Portfolio
The ETF mirrors the composition of the MVIS Australian A-REIT Index. The index consisted of 15 names as of July 2021. The portfolio holds a minimum of 10 stocks and excludes the smaller end of the cap spectrum, while mid-cap exposure is beefed up. Stocks that meet size and liquidity requirements are weighted by their free-float market capitalisation subject to a 10% weighting cap. While about a third held in the portfolio is directly invested in retail A-REITs, it has almost half of the allocation to diversified REITs. Sector exposures are significantly more consistent through time. A-REIT Index owing to limited stock changes in the top of the ASX/200 and the stock exposure limit of 10%. The portfolio is rebalanced every quarter; because of its exposure cap, turnover is typically 20%-40% .
| Sub- Industry Weightage | |
| Diversified REITS | 46.20% |
| Retail REITS | 28.00% |
| Office REITS | 11.90% |
| Industrial REITS | 10.70% |
| Specialized REITS | 3.20% |
| Other/Cash | 0.00% |
Source: MVA-Factsheet
Performance
MVA has closely matched the broader A-REIT market return while delivering standout performance against the category average from its inception through 31 July 2021. The ETF has annually outperformed the category average by 1.4% or 21% on a cumulative basis since inception.
Source: MVA-fact-sheet
Fundamentals
| No. of securities | 15 |
| Price/Earnings Ratio* | 10.66 |
| Price/Book Value Ratio* | 1.12 |
| Dividend Yield | 4.26 |
| Weighted Avg. Market Cap (M) | $12,362.00 |
Source: MVA-fact-sheet
People
The VanEck investment team is headed by Russel Chesler with Jamie Hannah as his deputy. Chesler is an industry veteran with over 25 years of experience across Sunstone Partners, Perpetual Limited, and Liberty Life. Hannah joined VanEck in 2014 from Source ETF where he was a part of the investment management team. The duo is supported well by two senior associates: Cameron McCormack and Alice Shen.
Price
The Net Asset Value of the fund (NAV) is $24.88 as on 31 August 2021 while the management cost is 0.35% p.a.n.m.
Top 10 Holdings of VanEck Australian Property ETF
Source: MVA-fact-sheet
About the fund
The VanEck Australian Property ETF incorporated on 14/10/2013 which 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 A-REITs Index.
The MVIS Australia A-REITs Index is a pure-play Australian sector index that aims to reflect the performance of Australia’s property sector.
The shares outstanding is 23,955,918 and the dividend is paid two times each in a year.
Individual Index components are chosen based on a strict rules-based system that prioritises liquidity, with a minimum of 10 holdings and a maximum weighting of 10% for each. . The underlying index sets itself apart from market-cap-weighted benchmarks with its sensible portfolio size that covers
(Source: Morningstar)
General Advice Warning
Any advice/ information provided is general in nature only and does not take into account the personal financial situation, objectives or needs of any particular person.
The ultimate result is that this allows managers to decide on the portfolio that represents the index’s overall risk profile, while allowing the ETF manager to avoid purchasing bonds that suffer from illiquidity. The management process is highly automated, and managers use proprietary analytical and risk control systems. The key objective is to minimise trading costs, mainly around primary market events (for example, auctions) that cause rebalancing. All trading is executed by the in-house capital markets desk. Bond coupons are reinvested in line with index rules.
Portfolio:
The Markit iBoxx USD Liquid Investment Grade Index measures the performance of the most liquid USD denominated corporate bonds with investment-grade ratings and minimum remaining life of 3 years by issuers from developed countries. To be considered for inclusion, bonds must have a minimum remaining maturity of 3.5 years and a minimum outstanding of USD 750 million. In addition, the index also requires a minimum outstanding of USD 2 billion per issuer. The index is weighted by market capitalisation, subject to an issuer overall cap of 3%.
People:
The strategy is managed by the EMEA core portfolio management team. Sid Swaminathan is the head of the core portfolio management team. This is a large team where portfolio managers specialise in two broad groupings, one focusing on rates and inflation strategies and the other on credit and aggregate funds. The portfolio managers are supported by a large team of analysts and IT professionals, as well as by the global capital markets team.
Performance:
The strategy has delivered returns above the category average in short and long periods over the past 15 years both on a total and risk-adjusted basis. The strategy struggled during the worst of the coronavirus sell-off in March 2020, but it rebounded strongly once the US Federal Reserve cut interest rates from 1.50% to just above 0.00% and started buying corporate-bond ETFs.
The annualized performance (%USD) displayed by this fund as on 31st August, 2021 has been shown below:
(Source: Factsheet from iShares.com)
Price:
The fees levied by the share class is in the cheap category. Analysts expect that this share class will be able to generate positive alpha relative to the category benchmark index, which affirms the outperformance of this ETF.
(Source: Factsheet from iShares.com) (Source: Morningstar)
(Source: Morningstar)
About ETF:
iShares USD Corporate Bond ETF tracks an index that excludes bonds with maturity below three years, which account for up to 20% of the investable universe. This causes the strategy to have higher duration than all-maturity passive alternatives. This can work both in favour and against investors depending on the path of interest rates. The strategy is expected to deliver returns over a full market cycle; that is inclusive of periods of both rising and falling interest rates. Considering the benefits of low fees and the broad diversification at the sector level, the strategy retains a Morningstar Analyst Rating of Bronze. iShares’ passive bond fund management process and the high level of expertise of the people behind it showcases a positive view of the ETF.
General Advice Warning
Any advice/ information provided is general in nature only and does not take into account the personal financial situation, objectives or needs of any particular person.
Approach
Fidelity analysts use a variety of proprietary models and valuation methodologies to assess earnings, cash flows, and value. Site visits and extensive company management meetings play a critical role in the investment process, as fidelity believes these provide valuable insights into a company’s future prospects. Each investment analyst covers around 25 companies, grouped along sector lines but sectors are rotated every three to four years. The overall portfolio tends to exhibit a growth bais.
Portfolio
Fidelity Australian Opportunities is an all-cap domestically focused approach. The portfolio typically holds 40 – 70 stocks with core holdings in large-cap names but a longer portfolio tail of small-cap names. As a result, the average market cap slightly lower than other large-cap peers and around 50-55% of the portfolio sits in the top 10. This means active share hover around 45-50%. Positioning is aligned with a long term view of companies, and the historical average annual turnover has been moderate at about 30-50%, which will also make it reasonably tax effective.
People
Howitt was promoted to portfolio manger soon after joining fidelity in 2004 as an analyst covering banks, insurers and diversified financials. Prior to fidelity, she was an analyst/portfolio manager in AMP capital’s value team and also worked as an consultant with the Boston Consulting Group. Support comes from a wide range of local and global sources, including the Sydney based investment research team and the implementation of an assistant portfolio manager. Each analyst coverage responsibilities for a specific sector and these rotate every three to four year to ensure the analysts continued to produce well rounded insights.
Performance
Fidelity Australian Opportunities continues to impress long-term track records. The year 2018 was more Tricky, as positions in blue sky and Lynas materially detracted. The strategy responded well in 2019 as Lynas recovered, while CSL and Wisetech continued their strong appreciation. Despite the volatile markets during calendar 2020, performance was particularly strong, beating the benchmark and most peers. The sector Neutral-Approach protected capital on the downside, with the strong showings from Lynas, Mineral Resources, and BlueScope. Despite no significant sector bets, positions in the materials sector played a key role in the Outperformance, with Howitt’s stock picking talents on full display.
About the Fund
Fidelity Australian Opportunities continues to impress with its quality management and unique approach, bolstered by the firm’s global footprint and top-tier research capabilities. Despite the numerous benefits that come with size and scale, the large footprint of the Fidelity group does create limitations for portfolio construction. Where the firms owns 10% of a company, strategies under the fidelity banner can no longer invest in the stock, though it’s a small price to pay for fidelity’s resources. An adaptive process and tenured portfolio manager set the strategy apart, offering an solid choice for diversified exposure to Australian equities.
General Advice Warning
Any advice/ information provided is general in nature only and does not take into account the personal financial situation, objectives or needs of any particular person.
manages one of the top retail portfolios in the country. It owns and operates Class A traditional regional malls and premium outlets in markets with dense populations and high incomes; these malls frequently have domestic or international tourist appeal. The high-quality properties will continue to provide consumers with unique shopping experiences that are hard to replicate elsewhere, and as a result, we think Simon’s portfolio will be sought after by retailers that are increasingly pursuing an omnichannel strategy.
E-commerce continues to pressure brick-and-mortar retail as consumers increasingly move their shopping habits online. However,physical retail sales growth will still be positive over the next decade. Retailers are becoming more selective with their physical locations, opting to locate storefronts in the highest-quality assets that Simon owns while closing stores in lower-quality malls. Additionally, many e-tailers are beginning to open stores in Class A malls to take advantage of the high foot traffic, as a physical presence provides additional marketing, a showroom for products they want to highlight, and another source of sales.
However, Simon is still dealing with the fallout of the coronavirus pandemic. Shopping at brick-and-mortar locations fell as some consumers shifted purchases to e-commerce platforms. While Simon’s revenue is somewhat protected by long-term leases, occupancy fell near 90% in 2020 and has only recently started to recover while rent still remains below prepandemic levels. We believe that Class A malls will rebound and that these high-quality malls will eventually return to their prior occupancy and rent levels, but the short-term impact to Simon’s cash flow has been significant.
Financial Strength
Simon is in good financial shape from a liquidity and a solvency perspective. The company seeks to maintain a solid but flexible balance sheet, which we believe will serve stakeholders well. Simon has an A/A3 credit rating, so it should be able to easily access low-rated debt to service financial obligations. Debt maturities in the near term should be manageable through a combination of refinancing and significant free cash flow. Additionally, the company should be able to access the capital markets when development and redevelopment opportunities arise. We expect 2021 net debt/EBITDA and EBITDA/interest to be roughly 7.1 and 4.5 times, respectively. We expect the company’s credit rating to remain stable through steady net operating income growth in its existing portfolio. We think Simon has unrivaled access to capital markets in general, given its current strong balance sheet and a large, higher-quality, unencumbered asset base.
Bulls Says
- Simon’s access to capital, scale, and validated record position the firm to execute on any attractive and available investment opportunities.
- Simon’s high-quality portfolio will continue to present attractive locations for tenants to place stores even as retail companies look to reduce store counts and present the most desirable locations for e-tailers looking to establish a physical presence.
- Simon’s mall and outlet portfolio contains a high percentage of the best malls in the country where redevelopment capital can be deployed at the most promising yields.
Company Profile
Simon Property Group is the second-largest real estate investment trust in the United States. Its portfolio includes an interest in 207 properties: 106 traditional malls, 69 premium outlets, 14 Mills centers (a combination of a traditional mall, outlet center, and big-box retailers), four lifestyle centers, and 14 other retail properties. Simon’s portfolio averaged $693 in sales per square foot over the past 12 months. The company also owns a 21% interest in Klepierre, a European retail company with investments in shopping centers in 16 countries, and joint venture interests in 29 premium outlets across 11 countries.
(Source: Morningstar)
General Advice Warning
Any advice/ information provided is general in nature only and does not take into account the personal financial situation, objectives or needs of any particular person.
