InvestSMART Australian Exchange-Traded Fund Quarterly Report - December 2017

The Australian ETF market exceeded expectations of $35bn in Funds under Management (FUM) at the end of 2017. This quarter, we consider the growing debate surrounding passive vs active investments and how to determine which ETF is right for you.

By ·
14 Feb 2018 · 20 min read

About this report

Welcome to InvestSMART’s December Quarter 2017 Australian Exchange-Traded Funds (ETF) update.

ETFs are the basis of InvestSMART’s Separately Managed Account (SMA) portfolios. The purpose of this report is to provide our clients with an easy to digest wrap of market activity as well as a greater level of insight into how and why we’ve built our SMA portfolios the way we have.

ETFs are a low-cost, hassle-free way for investors to achieve their investment objectives. Whether your aim is to diversify your portfolio or to obtain exposure to a particular asset class or investment theme, the ability to buy ETFs directly on the market, their low cost and transparency has seen the popularity of these securities amongst investors grow rapidly.

We have categorised the ETF market by asset class to allow members to quickly identify suitable securities to fill any investment gaps in their portfolio and remain aligned to their specific investment objectives.

Figure 1: Asset Classes
Asset ClassDescription
Commodities Exchange Traded Funds (ETFs) that provide exposure to various Commodities & Natural Resources.
Currency Exchange Traded Funds (ETFs) that provide exposure to various Currencies.
Diversified Exchange Traded Funds (ETFs) that provide Diversified Multi Sector exposure
Equities Exchange Traded Funds (ETFs) that provide exposure to Equity Markets.
Fixed Income & Cash Exchange Traded Funds (ETFs) that provide exposure to Interest Rate securities and Cash.
Property & Infrastructure Exchange Traded Funds (ETFs) that provide exposure to Domestic and Global Property and Infrastructure.

About InvestSMART

Founded in 1999, InvestSMART Group Limited (ASX:INV) believes everyone should have the confidence to control their financial future and it shouldn’t be hard or expensive to do so.

Whether you’re managing your own investments or looking for a little help, we deliver straightforward, flexible and affordable solutions to ensure you are better able to meet your investment goals.

Our three leading brands – InvestSMART, Eureka Report and Intelligent Investor – together offer actionable investment tools, wealth advice and independent ASX-listed stock research.

We’re all about making investing simple. Statistics show four in five Australians do not receive any professional investment advice, with cost the primary reason. We aim to change that.

Through our Portfolio Manager, stock research, wealth commentary and affordable investment products, we believe we are delivering the right tools to help all Australians grow and protect their wealth.

InvestSMART Star Rating

When reviewing an ETF there are some key metrics common to every security. Our quantitative 5 Star Rating System takes each of these items into account, reflecting the process we use to identify investments in InvestSMART’s ETF-based Portfolios.

We have categorised the ETF market by asset class to allow members to quickly identify suitable securities to fill any investment gaps in their portfolio and remain aligned to their specific investment objectives.

Figure 2: InvestSMART Star Rating Criteria
FactorDescription
Size Funds under management.
Fees Fund management fees as a percentage of FUM.
Liquidity Trading volumes.
Spread The average percentage difference between the bid & ask.
Tracking error The difference in the return profile of the Fund to its benchmark.

For our portfolios, we generally like to see a 4 to 5-star rating. This implies the security rates highly across each of the above-mentioned metrics. However, the star rating is best used as a filtering tool when comparing ETFs with the same objective.

It does not make sense to compare a highly liquid, and hence low-cost S&P 500 ETF, to one designed to track the performance of emerging markets, which are often less liquid and more expensive to access.

As the table below shows, only eight Australian ETFs out of the total of 173 listed funds achieve the maximum 5 Star Rating. The bulk of ETFs are rated 3 Stars or less.

It should also be noted that the InvestSMART Star Rating is a quantitative measure and it does not take personal investment objectives into account. It does not constitute a recommendation.

Figure 3: Number of ETFs per star rating
Star RatingNumber of ETFs
star 5 8
star 4 36
star 3 61
star 2 52
star 1 2
NA 2

So which ETF is best?

Following our September Quarter ETF report, we had a lot of members asking, “but which ETF is best?”

Determining this is not as simple as looking at a funds performance. As ETFs are passively managed and are constructed to track a given benchmark the performance of an ETF over any given period does not generally indicate it is better or worse than. Rather, it is simply reflective of the performance of the asset class or sector the ETF has been designed to track.

With this in mind, in order to determine which ETF is best for you, an investor must firstly understand how their portfolio is currently positioned. With over 60,000 self-directed investors utilising InvestSMARTs Portfolio Manager, we gather unique insights into the behaviour of a large proportion of Australia’s investing public.

We reviewed the average asset allocation of portfolios and found that most Australians wealth is invested in domestic equities.

Figure 4: Average asset allocation for portfolio sub $250k - 31 December 2017

Source: Information has been collated from de-identified data through InvestSMART’s Portfolio Manager and HealthCheckTM Comparison has been made to a model asset allocation as determined by InvestSMART Group.

 

We recognise that over the long term no one asset class is guaranteed to deliver substantial outperformance on a consistent basis and that attempting to time turning points across various asset classes is near impossible.

As such, our view on portfolio construction is based on the concept of diversification. Via InvestSMART's Health Check we assist our clients in understanding how their portfolio is currently positioned and whether it is appropriate in achieving their objectives.

If we take the above to be an indication of the ‘average’ Australian portfolio and decided a ‘balanced portfolio’ would be best suited in achieving our investment objective, we’d see that we are overweight domestic equities and would determine the following:

Figure 5: Balanced Asset Allocation
Asset ClassCurrent PortfolioBalanced PortfolioRequired Action
Australian Equities 72% 22% Reduce by 50%
International Equities 8% 22% Increase by 14%
Property 6% 11% Increase by 5%
Cash 11% 12% Increase by 1%
Fixed Interest 3% 33% Increase by 30%
Source: Information has been collated from de-identified data through InvestSMART’s Portfolio Manager and HealthCheckTM Comparison has been made to a model asset allocation as determined by InvestSMART Group.

What is ‘best’ for this particular portfolio therefore would be to diversify by re-investing a portion of Equity exposure across Fixed Interest and International Equities. We could then filter through the ETF market to find securities worthy of more detailed analysis. This can be achieved using InvestSMARTs ETF Filtering Tool.

For the Fixed interest component, should we decide we would like Australian Bond Exposure only. To identify these securities we could search for, Asset Class: Fixed income and Cash > Geographic Exposure: Australia > Category: Bonds – Australia.

Figure 6: Australian Fixed Income and Cash ETFs
Source: InvestSMART ETF Filtering Tool.

For the International Equities component, should we decide we would like to focus on large cap, global, broad-based securities. To identify these securities we could search for, Asset Class: Equities > Geographic Exposure: Global > Category: Equity World Large Blend.

Figure 7: Global Equity ETFs
Source: InvestSMART ETF Filtering Tool

After narrowing down the list, we can then conduct further due diligence to determine which security best suits our needs. We will explore the due diligence process next quarter.

Step 1Step 2Step 3Step 4
Portfolio Manager InvestSMART HealthCheck InvestSMART ETF Filter Due Diligence
Load your current holdings into the InvestSMART's Portfolio Manager Determine your investment objectives and identify where the holes exist in your Asset Allocation Use InvestSMART's ETF Filtering tool to identify ETFs that will provide exposure you need Review each ETF in greater detail to determine whether it suits your objectives

 

Track any security and over 8,000 funds
with the InvestSMART Portfolio Manager

The Active vs Passive Debate

As the ETF market grows, there is growing debate surrounding what is better, passive or active investment.

We don’t believe it is a simple black or white consideration. Perhaps to actively engaged investors the concept of a passive fund seems illogical. “Why would I want to invest in something that guarantees benchmark returns?”.

However, for the average person who does not have the time or skill to invest themselves or identify a manager that will ensure they consistently outperform over an extended period, passive strategies could be suitable. Even Warren Buffett has stated that for most investors the best option is to put their money in a low-cost index fund.

Passive investing has its place in building the core of a well-diversified portfolio. Where fees are justified by way of consistent long-term performance, active strategies also have a place within a portfolio in generating alpha (the excess return of an investment relative to the return of a benchmark index).

Figure 8: Passive vs Active Strategies
Where an allocation to passive strategies is suitableWhere an allocation to active strategies is suitable
'Generic' markets where mispricing is uncommon Markets where mispricing exists
As the core building blocks to a diversified portfolio Where a manager shows history of consistent outperformance
For investors who lack the time or skill to time markets  

Coming back to ETFs and contrary to common belief, no longer are all listed funds simple passive market cap weighted, index hugging securities and there is a growing number of actively managed funds coming to. That is, actively managed funds that you can buy or sell in the same way as any security on the market. These securities are being generally referred to as Exchange Quoted Managed Funds (EQMF) or Exchange Traded Managed Funds (ETMF). Similar to mFunds but actively quoted not just settled on ASX systems. 

This growing category of listed fund allows investors to allocate capital toward active managed strategies without the hassle of filling out additional paperwork and with the benefit of knowing the price at which you will be buying or selling units at the time of transaction.

Figure 9: Benefits of a listed fund
Listed: Benefits to InvestorsListed: Benefits to Fund Managers
No minimum investment barriers Open ended
Ability to buy & sell as easily as any other listed security Reduced paperwork
Pricing transparency Available on platforms/wrap accounts
Intra day pricing rather than end-of-day Distribute to direct investor


At present there are 14 actively managed funds listed on the exchange with varying mandates, from those that focus on yield, to small caps, to international equity markets. 2017 saw 5 new actively managed funds come to market and we see this becoming an increasingly common way for fund managers to structure their funds.

Figure 10: Exchange Quoted Managed Funds.
CodeNameRegionAsset ClassSub CategoryMERSpreadTotal CostFUM ($m)
Asia
PAXX Platinum Asia Fund Asia Equities Equity Asia Pacific w/o Japan 1.10% n/a 1.10% 69.79
Australia
KSM K2 Australian Small Cap Fund Australia Equities Alternative Strategies 2.70% 1.21% 3.91% 16.55
SWTZ Switzer Dividend Growth Fund Australia Equities Equity Australia Large Growth 0.89% 0.51% 1.40% 77.67
HBRD BetaShares Active Australian Hybrids Fund Australia Fixed Income & Cash Bonds - Australia 0.55% n/a 0.55% 22.06
Global
DMKT AMP Capital Dynamic Markets Fund Global Equities Multisector Balanced 0.50% 0.60% 1.10% 25.53
GROW Schroder Real Return Fund Global Equities Multisector Balanced 0.90% 0.43% 1.33% 45.25
PIXX Platinum International Fund Global Equities Equity World Large Blend 1.10% n/a 1.10% 124.97
MGE Magellan Global Equities Fund Global Equities Equity World Large Blend 1.35% 0.41% 1.76% 980.89
MHG Magellan Global Equities Fund Currency Hdg Global Equities Equity World - Currency Hedged 1.35% 0.47% 1.82% 63.10
MOGL Montgomery Global Equities Fund Global Equities Equity World Large Value 1.89% n/a 1.89% 62.58
KII K2 Global Equities Fund Global Equities Alternative Strategies 2.70% 1.29% 3.99% 20.33
GLIN AMP Capital Global Infrastructur Securities Fund Unhdg Global Property & Infrastructure Infrastructure - Global 0.85% 0.62% 1.47% 28.24
RENT AMP Capital Global Property Securities Fund Unhdg Global Property & Infrastructure Equity Global Real Estate 0.99% 0.75% 1.74% 17.20
MICH Magellan Infrastructure Fund Ccy Hdg Global Property & Infrastructure Infrastructure - Global 1.05% 0.40% 1.45% 145.28
Note: n/a indicates insufficient data due to recent listing.
Source: ASX and Morningstar

When identifying whether a fund is a suitable investment, some things to consider include:

  1. Cost: As seen in the above table, actively managed funds will generally charge higher fees than passive funds. This is the premium you pay for the managers skill in generating alpha.
  2. Performance: Elaborating on point 1, does the manager have a track record of consistent performance over longer time frames? Manager skill is worth paying for.
  3. Investment Objectives: Perhaps the most important consideration is understanding what you are investing in and how it fits as part of achieving your overall investment objective. It is not sensible to simply chase returns without regard to risk. 

Given these funds are not intended to simply track their benchmark, we do not currently provide a star rating on them. The InvestSMART Star Rating is a measure designed to compare similar securities across a number of quantifiable metrics - size, costs, liquidity & tracking error. Throughout the analysis, this is denoted by 'Not Rated'.

 

Market Overview - FUM

The Australian ETF market exceeded expectations of $35bn in Funds under Management (FUM) by calendar year end.

While this has primarily been driven by inflows, strong performance across the traditional ‘risk’ asset classes, Commodities, Equities & Property have added to the FUM growth.

Figure 11: ETF Market breakdown by issuer
IssuerNo. Funds (Sep)No. Funds (Dec)FUM $m (Sep)FUM $m (Dec)Market Share
Blackrock 39 39 9,147.23 10,431.83 29.34%
Vanguard 17 22 8,992.92 10,077.28 28.34%
State Street 16 16 5,232.01 5,691.77 16.01%
Betashares 40 42 4,227.48 4,527.69 12.73%
Magellan 3 3 1,037.71 1,189.27 3.34%
VanEck 10 10 706.56 969.78 2.73%
Russell 6 6 621.96 647.82 1.82%
ETFS Securities 15 15 768.75 889.28 2.50%
Market Vectors 4 4 380.18 445.87 1.25%
UBS 9 9 271.50 272.19 0.77%
Platinum 2 2 - 194.76 0.55%
Switzer 1 1 73.70 77.67 0.22%
Montgomery 0 1 - 62.58 0.18%
Schroder 1 1 41.90 45.25 0.13%
K2 Asset Management 2 2 38.36 36.89 0.10%
  165 173 31,540.26 35,559.93 100.00%
Source: ASX and Morningstar

New funds continue to be listed with 8 new securities across a range of categories coming online during the December quarter.

Figure 12: New ETF listings
SecurityFundAsset ClassFocus
VBND Vanguard Global Aggregate Bd Hdg ETF Fixed Income & Cash Provide exposure to global income-generating securities.
HBRD BetaShares Active Australian Hybrids Fund (managed fund) Fixed Income & Cash Provide exposure to an actively managed, diversified portfolio of hybrid securities.
VDCO Vanguard Diversified Conservative ETF Diversified Diversified Fund of Funds. For investors with a low tolerance for risk.
VDBA Vanguard Diversified Balanced ETF Diversified Diversified Funds of Funds. For investors seeking a balance between income and capital growth.
VDGR Vanguard Diversified Growth ETF Diversified Diversified Funds of Funds. For investors seeking long-term capital growth.
VDHG Vanguard Diversified High Growth ETF Diversified Diversified Fund of Funds. For investors with a high tolerance for risk who are seeking long-term capital growth.
FAIR BetaShares Australian Sustnby Ldrs ETF Equities Ethical, sustainable focused Domestic Equity Fund.
MOGL Montgomery Global Equities Fund (Managed Fund) Equities Value focused Global Equities Fund.
Source: ASX and Morningstar
Figure 13: Australian ETF market breakdown
Asset ClassGeographyIssuer
The largest asset class in terms of both product range as well as FUM is equities, representing over 75% of the market. Geographically, the largest exposure for ETFs across the market is Australia, followed by those providing diversified global exposure. With combined FUM over $30 billion, close to 90% of the Australian ETFs market is managed by five issuers, namely BlackRock, Vanguard, State Street, BetaShares and Magellan.
Source: ASX and Morningstar

Market Overview - Flows 

Fund flow is an interesting metric when analysing the ETF market as it provides insight into ‘net demand’. Given the majority of ETFs are index tracking, that is they are designed to replicate the performance of a given market index or asset class, analysing flows gives an insight into trends in market sentiment toward a given thematic.

Overview

Figure 14: FUM Flows & Turnover 

Source: ASX and Morningstar

Equities continue to see the majority of inflows, though the most notable change when compared to previous periods has been in the Fixed Income & Cash category. December was the first time this calendar year that there were net outflows in this category.

While ETFs designed to provide exposure to floating rate securities (FLOT, QPON & HBRD) saw net inflows, BetaShares Australia High Interest Cash ETF (AAA) saw net outflows of $75m during the month of December. 

November saw exceptionally large equity market focused inflows with iShares Core S&P ASX 200 ETF (IOZ) making up over a third of this figure.

Figure 15: FUM Flows ($m) by Asset Class 

Source: ASX and Morningstar

ETFs designed to provide broad based equity exposure saw the largest inflows for the quarter, while BetaShares Dividend Harvesting (HVST), US Dollar (USD) and British Pound (POU) ETFs saw the largest net outflows.

Figure 16: Largest Inflows (Qtr)
ETFFlows ($m)Sub Category
[IOZ] iShares Core S&P/ASX 200 ETF 510.71 Equity Australia Large Blend
[VGS] Vanguard MSCI Index Intl ETF 106.67 Equity World Large Blend
[VHY] Vanguard Australian Shares High Yld ETF 82.48 Equity Australia Large Blend
[PIXX] Platinum International {Quoted Mngd Hdg} 82.46 Equity World Large Blend
[QPON] Betashares Aus Bank Sr Fitng Rt Bd ETF 80.05 Diversified Credit
Source: ASX and Morningstar
Figure 17: Largest Outflows (Qtr)
ETFQtr Flows ($m)Sub Category
[HVST] BetaShares Australian Div Harvester (mgd) -71.36 Equity Australia Large Value
[USD] BetaShares US Dollar ETF -33.87 Miscellaneous
[POU] BetaShares British Pound ETF -27.30 Miscellaneous
[ETF] UBS IQ Morningstar Australia Quality ETF -17.52 Equity Australia Large Blend
[ITW] iShares MSCI Taiwan ETF -16.59 Equity World Other
Source: ASX and Morningstar

Market Overview - Costs

There are two main components to the total cost of an ETF. The Management Expense Ratio (MER) and the difference between the Bid and the Offer (spread). 

Generally speaking, simpler index tracking (passive) funds will have a lower MER than an Actively Managed Fund. This is primarily due to the difference in the objectives of the Fund Manager. While passive funds are designed to deliver returns in line with a benchmark, active funds are managed to outperform them and to do so consistently over long periods of time requires a greater level of oversight, experience and skill.

The spread is generally a function of the liquidity in the underlying securities and transactional costs to acquire them.

Overview

Figure 18: Cost Analysis 

Source: ASX and Morningstar

Fixed income & cash remains the cheapest asset class, even after incorporating spreads.

At a security level, broad-based equity market and cash-focussed ETFs are the cheapest, which is reflective of underlying liquidity in these markets.

Geographically, ETFs focused on Australia and the US are, on average, the cheapest.

Per below, index tracking broad based equity and cash exposed ETFs are the cheapest with low MERs and tight spreads, whereas the active and more exotic strategies funds tend to be more expensive.

It should be emphasised though that high fees should not be cause for immediate dismissal when reviewing an ETF. If a particular security is suited to achieving your investment objective, or if in the case of an actively managed fund, long term performance warrants paying a higher fee, then they should be considered.

Figure 19: 5 cheapest ETFs
ETFMERQtr Avg
Spread
Total
Cost
Management Type
[BILL] iShares Core Cash ETF 0.07% 0.01% 0.08% Index Tracking
[IVV] iShares S&P 500 ETF 0.04% 0.05% 0.09% Index Tracking
[VTS] Vanguard US Total Market Shares ETF 0.04% 0.08% 0.12% Index Tracking
[ISEC] iShares Enhanced Cash ETF 0.12% 0.01% 0.13% Smart Beta
[VAS] Vanguard Australian Shares ETF 0.14% 0.04% 0.18% Index Tracking
Source: ASX and Morningstar
Figure 20: 5 most expensive ETFs
ETFMERQtr Avg
Spread
Total
Cost
Management Type
[KII] K2 Global Equities Fund (Hedge Fund) 2.70% 1.37% 4.07% Actively Managed
[KSM] K2 Australian Small Cap Fund 2.70% 1.25% 3.95% Actively Managed
[QAG] BetaShares Agriculture ETF CcyHgd(Synth) 0.69% 1.61% 2.30% Index Tracking
[MOGL] Montgomery Global Equities Fund (Managed Fund) 1.89% 0.28% 2.17% Actively Managed
[QCB] BetaShares Com Basket ETF Ccy Hgd(Synth) 0.69% 1.43% 2.12% Index Tracking
Source: ASX and Morningstar

Market Overview - Performance

A passively managed ETF should closely track its underlying index. Unlike active fund mandates, negative returns do not necessarily mean the fund manager is doing a bad job, but rather reflects the performance of the underlying securities the ETF has been designed to track.

When reviewing an actively managed fund though, cost vs long term performance is an important metric to consider.

Overview

Figure 21: 3, 6 & 12 month performance

Source: ASX and Morningstar

Equities and resources were the standout performers during the period with many securities showing double digit returns for the quarter.

As a result and as would be expected, the ‘bear’ funds (BBOZ, BBUS & BEAR), that is those designed to deliver positive returns when equity markets fall, have performed poorly.

Geographically, ETFs exposed to Asia and emerging markets have delivered strong returns over the past year.
Figure 22: Top 5 performing securities
ETF3 Mnth ReturnSub Category
[IJR] iShares S&P Small-Cap ETF 17.61% Equity North America
[OOO] BetaShares Crude Oil ETF Ccy Hgd(Synth) 15.69% Commodities & Precious Metals
[GEAR] BetaShares Geared Australian Equity(Hdg) 15.68% Equity Australia Large Geared
[OZR] SPDR? S&P/ASX 200 Resources ETF 15.48% Equity Australia Other
[QRE] BetaShares S&P/ASX200 Res Sect ETF 15.44% Equity Australia Other
Source: ASX and Morningstar
Figure 23: Worst 5 performing securities
ETF3 Mnth ReturnSub Category
[BBOZ] BetaShares Australian Eqs Strong BearHdg -15.51% Alternative Strategies
[BBUS] BetaShares US Eqs Strong Bear H-Ccy Hdg -14.16% Alternative Strategies
[BEAR] BetaShares Aus Equities Bear Hedge -6.74% Alternative Strategies
[QAG] BetaShares Agriculture ETF CcyHgd(Synth) -3.72% Miscellaneous
[AUDS] BetaShares Strong Australian Dollar Hdg -2.06% Alternative Strategies
Source: ASX and Morningstar

Market Overview - Yield

Yield is the income earned on an investment and is expressed as a percentage. Historically, Fixed income, Property & Infrastructure securities generate most of an investor’s return from distributions of income.

Equities are mixed given a company has the option to distribute profits or retain them to grow, while investments in Commodities and Currency return little to no returns from yield given they are non-income producing assets.

Figure 24: Average historic yield

Source: Morningstar

Overview

As expected, Equities Fixed Income & Cash and Property & Infrastructure continue to provide the greatest income based returns on average.

Geographically, Australia sees the highest returns from income, reflective of our relatively high interest rates and equity pay-out ratios when compared to the rest of the world.

The highest yielding security for the year to December was BetaShares Australian Dividend Harvester (HVST). This fund is specifically aimed to generate regular franked dividend income by investing in large cap Australian shares.

Figure 25: Top 5 Yielding ETFs
ETFHistoric YieldSub Category
[HVST] BetaShares Australian Div Harvester(mgd) 11.23% Equity Australia Large Value
[IHOO] iShares Global 100 AUD Hedged ETF 11.15% Equity World - Currency Hedged
[VCF] Vanguard Intl Credit Secs Idx (Hdg) ETF 10.29% Diversified Credit
[VIF] Vanguard Intl Fxd Intr Idx (Hdg) ETF 10.17% Bonds - Global
[ZYAU] ETFS S&P/ASX 300 High Yield Plus ETF 9.95% Equity Australia Large Blend
Source: ASX and Morningstar

 

Securities Overview - Commodities

These securities are designed to provide exposure to the performance of various commodities and natural resources. The majority are physically backed, though there is a number of synthetic securities available.

We do not hold any Commodity focused ETFs in InvestSMART's Separately Managed Account (SMA) portfolio.

CommoditiesFUM ($m)Qtr
Flows
Avg Returns
3m
Avg Returns
12m
$ 729m $ -20.8m 3.70% 5.20%
Avg Star RatingAvg YieldAvg MERQtr Avg SpreadNo. Funds
star2.0 0.00% 0.54% 0.72% 10
Source: ASX and Morningstar

Overview

While BetaShares Currency Hedged Gold Bullion ETF (QAU) saw net outflows for the quarter of $11.6m, ETF Securities Gold ETF (GOLD) saw $11m in net inflows. While it may be coincidental, it may also be reflective of a switch into the lower cost GOLD (0.40% MER) and of a view on the currency as GOLD is unhedged whereas QAU is hedged.

BetaShares Currency Hedged Agriculture ETF (QAG) was the only security of this category to deliver a negative return for the period, while rising oil prices saw BetaShares Oil ETF (OOO) deliver positive returns in excess of 15%.

Geographic Exposure

Figure 26: Commodity ETFs by Geography 

Source: ETF Issuers^
^ETF Issuers indicates a combination of ETF providers as detailed in the Issuer column of Figure 11, as throughout the entire ETF report 

Key Data: Commodity ETFs

Figure 27: Commodity ETFs
NameCodeFUM ($M)Qtr Flows ($M)MERQtr Avg Spread3MTH Return12MTH ReturnHistorical YLDQTR AVG LiquiditySub CategorySTAR Rating
GLOBAL
Agriculture
BetaShares Agriculture ETF CcyHgd(Synth) QAG 2.25 -0.33 0.69% 1.61% -3.72% -11.90% 0.00% 12.71% Miscellaneous star1
Diversified Commodities
ETFS Physical PM Basket ETC ETPMPM 5.00 0.00 0.44% 0.70% 3.03% 6.56% 0.00% 2.82% Commodities & Precious Metals star2
BetaShares Com Basket ETF Ccy Hgd(Synth) QCB 8.12 -1.77 0.69% 1.43% 5.51% 4.15% 0.00% 17.67% Commodities & Precious Metals star1
Gold.
ETFS Physical Gold ETC GOLD 559.99 11.03 0.40% 0.14% 0.84% 2.70% 0.00% 4.42% Commodities & Precious Metals star4
BetaShares Gold Bullion ETF Ccy Hedged QAU 49.21 -11.68 0.59% 0.28% 0.40% 10.67% 0.00% 19.39% Commodities & Precious Metals star2
ETFS Physical Singapore Gold ETF ZGOL 13.26 0.00 0.40% 0.24% 0.96% 3.14% 0.00% 4.12% Commodities & Precious Metals star2
Oil
BetaShares Crude Oil ETF Ccy Hgd(Synth) OOO 32.36 -15.26 0.69% 0.25% 15.69% 3.00% 0.00% 17.36% Commodities & Precious Metals star2
Palladium
ETFS Physical Palladium ETC ETPMPD 1.15 -1.01 0.49% 0.89% 13.27% 44.05% 0.00% 7.66% Commodities & Precious Metals star2
Platinum
ETFS Physical Platinum ETC ETPMPT 1.16 -1.80 0.49% 0.83% 0.74% -6.05% 0.00% 6.35% Commodities & Precious Metals star2
Silver
ETFS Physical Silver ETC ETPMAG 56.61 0.00 0.49% 0.80% 0.23% -4.33% 0.00% 3.61% Commodities & Precious Metals star2
Source: ASX and Morningstar

Securities Overview - Currency

These securities are designed to track the performance of the Australian dollar relative to various currencies.

We do not hold any Currency focussed ETFs in InvestSMART'S Separately Managed Account (SMA) portfolios.

CurrencyFUM ($m)Qtr
Flows
Avg Returns
3m
Avg Returns
12m
$ 536m $ -59.2m 0.66% -1.42%
Avg Star RatingAvg YieldAvg MERQtr Avg SpreadNo. Funds
star2.9 0.30% 0.67% 0.15% 7
Source: ASX and Morningstar

Overview

USD and POU provide investors with a way to gain exposure to a falling Australian dollar relative to the US Dollar and British Pound respectively and the December quarter saw large outflows in each of these funds. The consensus view is that the AUD will be lower by year end with low expectations of a rate rise in 2018 compared to more hawkish foreign central banks.

Geographic Exposure

Figure 28: Currency ETFs by Geography 

Source: ETF Issuers

 

Key Data: Currency ETFs

Figure 29: Currency ETFs
NameCodeFUM ($M)Qtr Flows ($M)MERQtr Avg Spread3MTH Return12MTH ReturnHistorical YLDQTR AVG LiquiditySub CategorySTAR Rating
ASIA
ETFS Physical Renminbi ETF ZCNH 0.46 0.00 0.30% 0.24% 2.41% -1.17% 0.00% 1.28% Miscellaneous star2
EUROPE
BetaShares Euro ETF EEU 6.92 1.14 0.45% 0.12% 1.79% 4.90% 0.00% 15.51% Miscellaneous star3
BetaShares British Pound ETF POU 28.95 -27.30 0.45% 0.09% 1.10% 1.03% 0.00% 32.28% Miscellaneous star3
AUSTRALIA
BetaShares Strong Australian Dollar Hdg AUDS 1.61 0.00 1.38% 0.19% -2.06% 19.26% 1.95% 79.49% Alternative Strategies star2
USA
BetaShares US Dollar ETF USD 472.87 -33.87 0.45% 0.10% 0.36% -7.41% 0.17% 9.93% Miscellaneous star5
BetaShares Strong US Dollar Hedge YANK 11.82 -1.35 1.38% 0.15% 0.56% -19.46% 0.00% 17.89% Alternative Strategies star2
ETFS Physical US Dollar ETF ZUSD 14.22 2.16 0.30% 0.15% 0.46% -7.11% 0.00% 14.51% Miscellaneous star3
Source: ASX and Morningstar

Securities Overview - Property & Infrastructure

These securities are designed to track various Domestic and Global Property & Infrastructure indexes. 

We hold positions in VAP, IFRA & DJRE in InvestSMART's Separately Managed Account (SMA) portfolios.

Property & InfrastructureFUM ($m)Qtr
Flows
Avg Returns
3m
Avg Returns
12m
$ 2226m $ 140.7m 4.42% 6.69%
Avg Star RatingAvg YieldAvg MERQtr Avg SpreadNo. Funds
star2.9 2.80% 0.59% 0.33% 9
Source: ASX and Morningstar

Overview

Domestic focused REITs were the best performing category this quarter with MVA, SLF & VAP all delivering returns in excess of 7% for the 3 months to December. Below we list these three securities head to head. It is interesting to note that despite a relatively small pool of potential securities to invest in, there are three ETFs designed to track Domestic REITs. Per below, you can see that each is constructed slightly differently and this will result is slightly different outcomes. It is important to dive deeper into an ETFs construction when selecting one that is right for you.

Geographic Exposure

Figure 30: Property & Infrastructure ETFs by Geography 

Source: ETF Issuers
Figure 31: Comparison of Australian REIT ETFs
 VanEck Vectors Australian Property ETFSPDR S&P/ASX 200 Listed Property ETFVanguard Australian Property Securities ETF
Code MVA SLF VAP
Manager VanEck State Street Vanguard
Benchmark MVIS Australian A-REIT Index S&P/ASX 200 A-REITs S&P/ASX 300 A-REITs
Benchmark Methodology Market Capitalisation Market Capitalisation Market Capitalisation
Benchmark Constituents 11 20 31
Star Rating 3 Stars 4 Stars 4 Stars
MER 0.35% 0.40% 0.23%
Avg Spread 0.15% 0.18% 0.09%
12 Month Return 7.27% 5.56% 6.61%
Tracking Error 0.15% 0.09% 0.09%
Distribution Frequency Semi-Annual Quarterly Quarterly
Source: ASX and Morningstar

VAP is our preferred security in this space given greater diversification with 31 underlying securities, low tracking error, MER and spread.

Want exposure within the Property & Infrastructure sector?
Invest in the InvestSMART Property and Infrastructure Portfolio

 

Key Data: Property & Infrastructure ETFs

Figure 32: Property & Infrastructure ETFs
NameCodeFUM ($M)Qtr Flows ($M)MERQtr Avg Spread3MTH Return12MTH ReturnHistorical YLDQTR AVG LiquiditySub CategorySTAR Rating
AUSTRALIA
Property
VanEck Vectors Australian Property ETF MVA 77.92 2.90 0.35% 0.16% 7.07% 7.27% 5.47% 5.31% Equity Australia Real Estate star3
SPDR? S&P/ASX 200 Listed Property ETF SLF 598.21 -3.91 0.40% 0.18% 7.77% 5.56% 4.09% 3.60% Equity Australia Real Estate star4
Vanguard Australian Property Secs ETF VAP 1,098.93 66.54 0.23% 0.08% 7.72% 6.61% 2.58% 5.15% Equity Australia Real Estate star4
GLOBAL
Infrastructure
AMP Capital Global Infras Secs Unhdg GLIN 28.24 3.55 0.85% 0.70% 0.81% 8.22% 2.07% 5.36% Infrastructure - Global Not Rated
VanEck Vectors FTSE Glbl Infras(Hdg)ETF IFRA 64.06 14.32 0.52% 0.20% 2.09% 14.61% 3.17% 13.63% Infrastructure - Global star3
Magellan Infrastructure Ccy Hdg ETF MICH 145.28 30.66 1.05% 0.44% 3.02% 16.35% 2.69% 8.03% Infrastructure - Global Not Rated
ETFS Global Core Infrastructure ETF CORE 2.34 1.60 0.45% N/A 2.28% 0.00% 0.22% 41.39% Equity World Other star2
Property
SPDR? Dow Jones Global Real Estate ETF DJRE 194.06 25.84 0.50% 0.13% 3.81% -0.77% 3.45% 10.58% Equity Global Real Estate star3
AMP Capital Global Property Secs Unhdg RENT 17.20 -0.75 0.99% 0.82% 5.19% 2.40% 1.46% 5.18% Equity Global Real Estate Not Rated
Source: ASX and Morningstar
 

Securities Overview - Fixed Income & Cash

These securities are designed to provide investors access to domestic and global Fixed Income & Cash securities.

We hold positions in AAA, FLOT & IAF in InvestSMART's Separately Managed Account (SMA) portfolios.

Fixed Income & CashFUM ($m)Qtr
Flows
Avg Returns
3m
Avg Returns
12m
$ 4089m $ 278.4m 1.07% 2.94%
Avg Star RatingAvg YieldAvg MERQtr Avg SpreadNo. Funds
star3.3 2.9% 0.26% 0.16% 25
Source: ASX and Morningstar

Overview

Domestic Government Bonds were the best performing of the fixed interest securities over both the quarter and the last 12 months. The majority of inflows were directed to funds exposed to floating rate securities (HBRD, QPON, FLOT) and domestic corporate fixed rate securities (PLUS & VACF).

Vanguard listed a new Hedged Global Bond Fund (VBND) in October which seeks to provide exposure to high-quality, income-generating securities issued by governments, government-owned entities, government-guaranteed entities, investment-grade corporate issues and securitised assets from around the world. 

 

Reduce volatility  
with the InvestSMART Hybrid Income Portfolio

 

Geographic Exposure

Figure 33: Fixed Income & Cash ETFs by Geography 

Source: ETF Issuers

 

Key Data: Fixed Income & Cash ETFs

Figure 34: Fixed Income & Cash ETFs
NameCodeFUM ($M)Qtr Flows ($M)MERQtr Avg Spread3MTH Return12MTH ReturnHistorical YLDQTR AVG LiquiditySub CategorySTAR Rating
GLOBAL
Corporate
iShares Core Global Corp Bd AUDH ETF IHCB 85.57 6.40 0.26% 0.20% 1.28% 5.68% 2.91% 14.23% Bonds - Global star3
iShares Global High Yield Bond AUDH ETF IHHY 23.62 -2.13 0.56% 0.25% 0.27% 6.78% 6.46% 33.02% High Yield Credit star2
Diversified
iShares JP Morgan USD EmMkts Bd AUDH ETF IHEB 12.04 1.07 0.51% 0.19% 1.14% 10.16% 3.29% 51.82% Bonds-Emerging Market Debt star2
Vanguard Intl Credit Secs Idx (Hdg) ETF VCF 112.68 -10.81 0.30% 0.22% 1.13% 5.23% 10.29% 16.83% Diversified Credit star3
Vanguard Global Aggregate Bd Hdg ETF VBND 4.55 4.53 0.20% N/A 0.00% 0.00% 0.37% 47.16% Bonds - Global star2
Government
Vanguard Intl Fxd Intr Idx (Hdg) ETF VIF 159.90 10.03 0.20% 0.19% 0.83% 2.57% 10.17% 10.66% Bonds - Global star3
AUSTRALIA
Cash
BetaShares Aus High Interest Cash ETF AAA 1,257.38 -6.16 0.18% 0.02% 0.50% 2.03% 2.01% 17.51% Australian Cash star5
iShares Core Cash ETF BILL 163.85 8.02 0.07% 0.01% 0.42% 0.00% 0.89% 5.56% Australian Cash star5
iShares Enhanced Cash ETF ISEC 16.06 1.00 0.12% 0.01% 0.51% 0.00% 1.06% 8.29% Australian Short Term Fixed Interest star4
UBS IQ Cash ETF MONY 1.00 0.00 0.18% 0.06% 0.26% 0.00% 0.97% 2.83% Australian Cash star4
Corporate
VanEck Vectors Australian Corp Bd ETF PLUS 151.04 70.60 0.32% 0.23% 1.64% 0.00% 1.85% 18.99% Diversified Credit star4
Russell Inv Australian Select CorpBd ETF RCB 154.08 6.09 0.28% 0.23% 1.04% 4.98% 4.22% 6.11% Bonds - Australia star3
Vanguard Australian Corp Fxd Intr ETF VACF 84.07 21.20 0.26% 0.18% 1.43% 5.03% 2.94% 12.09% Bonds - Australia star3
VanEck Vectors Australian Fltng Rt ETF FLOT 52.15 31.13 0.22% 0.06% 0.66% 0.00% 1.44% 28.31% Diversified Credit star4
Betashares Aus Bank Sr Fltng Rt Bd ETF QPON 190.85 80.05 0.22% 0.04% 0.82% 0.00% 1.34% 24.52% Diversified Credit star4
Diversified
iShares Core Composite Bond ETF IAF 494.27 38.52 0.20% 0.12% 1.39% 3.47% 2.29% 5.83% Bonds - Australia star4
Vanguard Australian Fixed Interest ETF VAF 679.81 0.23 0.20% 0.07% 1.39% 3.50% 2.88% 6.25% Bonds - Australia star4
Government
SPDR? S&P/ASX Australian Bond ETF BOND 28.59 0.02 0.24% 0.15% 1.99% 4.05% 2.67% 5.64% Bonds - Australia star3
SPDR? S&P/ASX Australian Govt Bd ETF GOVT 12.87 -2.55 0.22% 0.12% 1.90% 3.68% 2.35% 11.32% Bonds - Australia star3
iShares Treasury ETF IGB 21.32 -8.21 0.26% 0.19% 1.52% 3.21% 2.65% 11.02% Bonds - Australia star3
iShares Government Inflation ETF ILB 99.24 2.34 0.26% 0.35% 2.54% 3.47% 0.94% 5.09% Bonds - Inflation - Linked star3
Russell Inv Australian Government Bd ETF RGB 59.88 0.01 0.24% 0.29% 1.74% 3.65% 3.14% 2.09% Bonds - Australia star3
Russell Inv Australian Semi-Govt Bd ETF RSM 60.88 0.03 0.26% 0.27% 0.95% 2.85% 2.36% 2.09% Bonds - Australia star3
Vanguard Australian Government Bond ETF VGB 141.88 4.99 0.20% 0.11% 1.45% 3.20% 2.56% 9.91% Bonds - Australia star4
Hybrids
BetaShares Active Australian Hybrids Fund (managed fund) HBRD 22.06 22.04 N/A 0.28% 0.00% 0.00% 0.47% 183.56% Bonds - Australia Not Rated
Source: ASX and Morningstar

Securities Overview - Diversified

These securities are designed to provide investors with diversified multi sector asset allocation.

We do not hold any Diversified ETFs InvestSMART's Separately Managed Account (SMA) portfolios.

DiversifiedFUM ($m)Qtr
Flows
Avg Returns
3m
Avg Returns
12m
$ 23m $ 30.9m 0.00% 0.00%
Avg Star RatingAvg YieldAvg MERQtr Avg SpreadNo. Funds
star2.0 0.42% 0.27% 0.28% 4
Source: ASX and Morningstar

Overview

Vanguard listed the Australia markets' first multisector or 'diversified' ETFs in November. These listed fund of funds follow the same principles that our diversified Separately Managed Account (SMA) portfolio does. Given they have only just listed, we will look to review them in greater detail next quarter as data is limited at the time of writing.

 

Geographic Exposure

Figure 35: Diversified ETFs by Geography

Source: ETF Issuers

 

Key Data: Diversified ETFs

Figure 36: Diversified ETFs
NameCodeFUM ($M)Qtr Flows ($M)MERQtr Avg Spread3MTH Return12MTH ReturnHistorical YLDQTR AVG LiquiditySub CategorySTAR Rating
GLOBAL
Balanced
Vanguard Diversified Balanced ETF VDBA 3.53 4.03 0.27% N/A 0.00% 0.00% 0.25% 60.89% Multisector Balanced star2
Conservative
Vanguard Diversified Conservative ETF VDCO 1.00 1.00 0.27% N/A 0.00% 0.00% 0.37% 54.87% Multisector Moderate star2
High Growth
Vanguard Diversified High Growth ETF VDHG 14.20 19.25 0.27% N/A 0.00% 0.00% 0.57% 75.54% Multisector Aggressive star2
Growth
Vanguard Diversified Growth ETF VDGR 4.55 6.57 0.27% N/A 0.00% 0.00% 0.48% 77.15% Multisector Growth star2
Source: ASX and Morningstar

Securities Overview - Equities

This group of securities provides the investor with broad-based as well as specific sector exposure across domestic and international equity markets. There are an increasing number of ETFs designed to achieve specific rules-based objectives, for example High Yield, Ethical, Value, Momentum.

We hold positions in IAA, IVV, VEQ, VEU, UMAX & IOZ in InvestSMART's Separately Managed Account (SMA) portfolios.

EquitiesFUM ($m)Qtr
Flows
Avg Returns
3m
Avg Returns
12m
$ 27954m $ 1998.8m 6.71% 13.43%
Avg Star RatingAvg YieldAvg MERQtr Avg SpreadNo. Funds
star2.9 2.78% 0.52% 0.27% 118
Source: ASX and Morningstar

Overview

Equity focused ETFs saw close to $2bn in net inflows in Dec Qtr on the back of strong equity market performance globally. These sentiments were shared in the domestic market with the iShares Core S&P ASX 200 ETF (IOZ) seeing huge inflows of over $500m.

In terms of performance, on a Geographic basis ETFs exposed to US and Asian markets saw the best returns for the quarter.

 

Want to get international exposure?
Invest in the InvestSMART International Equities Portfolio

 

Geographic Exposure

Figure 37: Equity ETFs by Geography

Source: ETF Issuers

 

Key Data: Equity ETFs

Figure 38: Equity ETFs Europe
NameCodeFUM ($M)Qtr Flows ($M)MERQtr Avg Spread3MTH Return12MTH ReturnHistorical YLDQTR AVG LiquiditySub CategorySTAR Rating
EUROPE
Equities - Broad
ETFS EURO STOXX 50? ETF ESTX 51.09 26.55 0.35% 0.19% -0.46% 15.13% 1.15% 27.89% Equity Europe star3
BetaShares WisdomTree Europe ETF-Ccy Hdg HEUR 53.62 5.15 0.58% 0.18% -1.15% 14.10% 1.44% 15.01% Equity Europe star3
iShares Europe ETF (AU) IEU 775.57 61.07 0.60% 0.13% 8.58% 26.20% 2.07% 5.98% Equity Europe star3
Vanguard FTSE Europe Shares ETF VEQ 141.52 22.80 0.35% 0.19% 2.17% 16.94% 2.22% 9.03% Equity Europe star3
Equities - Strategy
UBS IQ MSCI Europe Ethical ETF UBE 10.23 1.10 0.40% 0.34% 2.35% 16.18% 2.41% 5.75% Equity Europe star2
Source: ASX and Morningstar
Figure 39: Breakdown - Equity ETFs Emerging Markets
NameCodeFUM ($M)Qtr Flows ($M)MERQtr Avg Spread3MTH Return12MTH ReturnHistorical YLDQTR AVG LiquiditySub CategorySTAR Rating
EMERGING MARKETS
Equities - Broad
iShares MSCI BRIC ETF (AU) IBK 35.46 1.01 0.72% 0.70% 8.98% 31.61% 1.31% 7.34% Equity Emerging Markets star2
iShares MSCI Emerging Markets ETF (AU) IEM 610.00 19.69 0.72% 0.16% 7.68% 28.37% 1.63% 7.48% Equity Emerging Markets star3
Vanguard FTSE Emerging Markets Shrs ETF VGE 180.06 30.38 0.48% 0.28% 6.05% 20.88% 1.67% 11.77% Equity Emerging Markets star3
SPDR? S&P Emerging Markets ETF WEMG 17.21 -4.14 0.65% 0.27% 7.27% 24.59% 1.29% 20.95% Equity Emerging Markets star2
Source: ASX and Morningstar
Figure 40: Equity ETFs USA
NameCodeFUM ($M)Qtr Flows ($M)MERQtr Avg Spread3MTH Return12MTH ReturnHistorical YLDQTR AVG LiquiditySub CategorySTAR Rating
USA
Equities - Broad
iShares S&P Mid-Cap ETF IJH 124.84 -2.81 0.07% 0.30% 15.10% 15.24% 1.01% 9.26% Equity North America star4
iShares S&P Small-Cap ETF IJR 108.52 10.34 0.07% 0.51% 17.61% 14.39% 1.02% 6.02% Equity North America star4
iShares Russell 2000 ETF (AU) IRU 76.59 7.63 0.20% 0.50% 15.14% 15.09% 1.06% 5.74% Equity North America star2
iShares S&P 500 ETF IVV 2,504.48 16.30 0.04% 0.05% 12.45% 19.48% 1.49% 5.25% Equity North America star5
BetaShares NASDAQ 100 ETF NDQ 247.80 42.86 0.48% 0.11% 7.43% 22.28% 0.41% 11.33% Equity North America star4
BetaShares FTSE RAFI US 1000 ETF QUS 39.62 6.34 0.40% 0.14% 6.73% 6.97% 2.13% 11.89% Equity North America star3
SPDR? S&P 500 ETF SPY 19.58 -2.15 0.09% 0.14% 12.45% 19.37% 1.59% 20.38% Equity North America star4
Vanguard US Total Market Shares ETF VTS 1,179.95 38.10 0.04% 0.08% 6.15% 11.62% 1.46% 4.46% Equity North America star5
Equities - Strategy
BetaShares Geared US Eq- Ccy Hdg GGUS 14.38 3.12 0.80% 0.11% 14.07% 45.14% 0.62% 47.54% Equity World - Currency Hedged star2
iShares S&P 500 AUD Hedged ETF IHVV 103.01 9.14 0.10% 0.10% 6.86% 21.94% 1.74% 12.02% Equity North America star4
UBS IQ MSCI USA Ethical ETF UBU 6.37 0.00 0.20% 0.21% 6.77% 12.03% 1.88% 5.12% Equity North America star2
BetaShares S&P 500 Yield Maximiser UMAX 92.98 -1.76 0.79% 0.16% 3.98% 6.93% 4.08% 4.68% Equity World Other star3
ETFS S&P 500 High Yield Low Volatil ETF ZYUS 57.56 3.16 0.35% 0.18% 4.43% 2.25% 6.04% 8.19% Equity North America star3
BetaShares US Eqs Strong Bear H-Ccy Hdg BBUS 56.10 -4.88 1.38% 0.20% -14.16% -36.75% 0.00% 19.04% Alternative Strategies star2
Source: ASX and Morningstar
Figure 41: Equity ETFs, Asia
NameCodeFUM ($M)Qtr Flows ($M)MERQtr Avg Spread3MTH Return12MTH ReturnHistorical YLDQTR AVG LiquiditySub CategorySTAR Rating
ASIA
Equities - Broad
Market Vectors ChinaAMC A-Share ETF(Syn) CETF 9.43 4.08 0.72% 0.43% 5.92% 20.76% 0.92% 40.99% Equity Greater China star2
BetaShares WisdomTree Japan ETF-Ccy Hdg HJPN 78.12 25.50 0.58% 0.18% 9.32% 22.81% 2.15% 26.34% Equity Japan star3
iShares Asia 50 ETF (AU) IAA 386.29 31.16 0.50% 0.45% 12.02% 33.60% 1.25% 5.88% Equity Asia Pacific w/o Japan star3
iShares MSCI Hong Kong ETF (AU) IHK 16.95 4.63 0.48% 0.98% 7.91% 20.13% 3.78% 17.99% Equity World Other star2
iShares MSCI Japan ETF (AU) IJP 206.00 10.52 0.48% 0.24% 14.68% 20.51% 1.08% 10.98% Equity Japan star3
iShares MSCI South Korea ETF (AU) IKO 40.59 -8.30 0.64% 0.68% 14.76% 37.11% 2.51% 8.33% Equity World Other star2
iShares MSCI Singapore ETF ISG 6.42 -2.51 0.48% 0.71% 11.63% 26.79% 2.99% 7.41% Equity World Other star2
iShares MSCI Taiwan ETF ITW 45.24 -16.59 0.64% 1.05% 3.16% 19.26% 2.43% 10.61% Equity World Other star2
iShares China Large-Cap ETF (AU) IZZ 92.54 7.88 0.74% 0.51% 9.17% 22.86% 1.99% 13.71% Equity Greater China star2
Vanguard FTSE Asia ex Japan Shrs Idx ETF VAE 52.89 14.52 0.40% 0.26% 8.90% 28.15% 2.80% 22.03% Equity Asia Pacific w/o Japan star3
Platinum Asia (Quoted Managed Hdg) PAXX 69.79 36.65 1.10% N/A 9.09% 0.00% 0.00% 22.27% Equity Asia Pacific w/o Japan Not rated
Equities - Strategy
UBS IQ MSCI Japan Ethical ETF UBJ 4.47 0.96 0.40% 0.23% 8.77% 14.43% 1.38% 5.12% Equity Japan star2
UBS IQ MSCI Asia APEX 50 Ethical ETF UBP 8.91 4.64 0.45% 0.37% 8.10% 37.15% 0.32% 47.55% Equity Asia Pacific w/o Japan star2
Source: ASX and Morningstar
Figure 42: Equity ETFs Australia
NameCodeFUM ($M)Qtr Flows ($M)MERQtr Avg Spread3MTH Return12MTH ReturnHistorical YLDQTR AVG LiquiditySub CategorySTAR Rating
AUSTRALIA
Equities - Broad
iShares S&P/ASX 20 ETF ILC 323.86 -6.60 0.24% 0.08% 6.06% 7.04% 4.93% 4.45% Equity Australia Large Blend star4
BetaShares Aus Ex-20 Port Divrs ETF EX20 22.93 8.73 0.25% 0.17% 8.84% 18.20% 2.09% 25.74% Equity Australia Large Blend star3
iShares Core S&P/ASX 200 ETF IOZ 1,286.08 510.71 0.15% 0.06% 7.59% 11.60% 3.61% 20.01% Equity Australia Large Blend star5
iShares S&P/ASX Small Ordinaries ETF ISO 82.34 8.82 0.55% 0.31% 13.43% 19.30% 2.01% 8.60% Equity Australia Mid/Small Blend star3
VanEck Vectors S&P/ASX MidCap ETF MVE 62.50 8.33 0.45% 0.17% 11.72% 21.42% 3.61% 8.36% Equity Australia Mid/Small Blend star3
VanEck Vectors Small Coms Masters ETF MVS 69.92 2.41 0.49% 0.18% 10.51% 14.38% 3.10% 4.07% Equity Australia Mid/Small Blend star3
VanEck Vectors Australian Equal Wt ETF MVW 422.23 74.01 0.35% 0.08% 9.46% 15.54% 3.01% 12.65% Equity Australia Large Blend star4
BetaShares FTSE RAFI Australia 200 ETF QOZ 319.25 28.54 0.40% 0.10% 7.29% 11.27% 3.91% 15.26% Equity Australia Large Blend star4
SPDR? S&P/ASX 50 ETF SFY 485.47 18.40 0.29% 0.05% 6.36% 9.26% 4.59% 4.93% Equity Australia Large Blend star4
SPDR? S&P/ASX Small Ordinaries ETF SSO 16.46 0.00 0.50% 0.15% 13.58% 19.56% 2.46% 5.37% Equity Australia Mid/Small Blend star2
SPDR? S&P/ASX 200 ETF STW 3,587.34 69.51 0.19% 0.04% 7.68% 11.70% 4.10% 7.73% Equity Australia Large Blend star5
Vanguard Australian Shares ETF VAS 2,661.32 78.65 0.14% 0.04% 7.68% 11.81% 3.44% 7.31% Equity Australia Large Blend star5
Vanguard MSCI Australian Large Coms ETF VLC 81.99 5.08 0.20% 0.05% 6.30% 7.81% 4.04% 11.40% Equity Australia Large Blend star4
Vanguard MSCI Australian Small Coms ETF VSO 140.71 22.00 0.30% 0.10% 11.89% 17.99% 3.59% 10.26% Equity Australia Mid/Small Blend star4
ETFS S&P/ASX 100 ETF ZOZI 8.66 -2.10 0.24% 0.19% 6.98% 10.75% 4.73% 12.01% Equity Australia Large Blend star3
Equities - Sector
VanEck Vectors Australian Banks ETF MVB 28.39 1.19 0.28% 0.08% 2.63% 4.51% 5.56% 11.55% Equity Australia Other star3
VanEck Vectors Australian Resources ETF MVR 37.64 4.95 0.35% 0.12% 14.28% 27.85% 2.88% 10.37% Equity Australia Other star3
SPDR? S&P/ASX 200 Fincls EX A-REIT ETF OZF 72.72 10.53 0.40% 0.10% 0.97% 2.07% 4.86% 18.96% Equity Australia Other star4
SPDR? S&P/ASX 200 Resources ETF OZR 58.84 12.46 0.40% 0.16% 15.48% 25.49% 2.13% 12.00% Equity Australia Other star3
BetaShares S&P/ASX200 Fincls Sect ETF QFN 34.08 15.48 0.39% 0.13% 3.54% 4.63% 3.79% 26.02% Equity Australia Other star3
BetaShares S&P/ASX200 Res Sect ETF QRE 76.39 53.12 0.39% 0.25% 15.44% 25.37% 1.33% 38.00% Equity Australia Other star3
Equities - Strategy
iShares Edge MSCI Australia Mltfctr ETF AUMF 7.00 0.00 0.30% 0.19% 8.35% 15.38% 4.05% 13.71% Equity Australia Large Blend star3
BetaShares Managed Risk Australian Share AUST 26.50 -6.52 0.49% 0.12% 7.13% 9.62% 4.01% 8.72% Equity Australia Large Blend star3
BetaShares Australian Eqs Strong BearHdg BBOZ 90.27 9.44 1.38% 0.12% -15.51% -20.18% 0.00% 44.00% Alternative Strategies star3
BetaShares Aus Equities Bear Hedge BEAR 55.93 4.31 1.38% 0.11% -6.74% -8.69% 0.00% 16.23% Alternative Strategies star3
UBS IQ Morningstar Australia Div Yld ETF DIV 28.31 -1.77 0.30% 0.18% 8.35% 11.88% 3.89% 3.96% Equity Australia Large Growth star3
UBS IQ Morningstar Australia Quality ETF ETF 10.71 -17.52 0.30% 0.17% 8.02% 12.37% 1.44% 115.89% Equity Australia Large Blend star3
VanEck Vectors S&P/ASX Franked Div ETF FDIV 3.94 0.01 0.35% 0.16% 7.16% 5.89% 5.32% 8.67% Equity Australia Large Blend star3
BetaShares Geared Australian Equity(Hdg) GEAR 60.66 -13.24 0.80% 0.11% 15.68% 21.45% 6.16% 53.57% Equity Australia Large Geared star3
iShares S&P/ASX Dividend Opps ETF IHD 270.58 7.40 0.30% 0.12% 6.12% 8.63% 5.14% 4.42% Equity Australia Large Value star4
iShares Edge MSCI Australia Mini Vol ETF MVOL 6.74 0.00 0.30% 0.14% 7.05% 11.81% 4.43% 1.49% Equity Australia Large Blend star3
Russell Inv Australian Rspnb Inv ETF RARI 64.95 -3.78 0.45% 0.24% 5.81% 8.54% 5.30% 10.39% Equity Australia Large Value star3
Russell Inv High Dividend Aus Shrs ETF RDV 294.50 3.95 0.34% 0.08% 5.86% 9.50% 5.41% 3.54% Equity Australia Large Value star4
Russell Inv Australian Value ETF RVL 13.53 0.00 0.34% 0.08% 8.23% 5.77% 4.41% 2.88% Equity Australia Large Value star3
BetaShares Australian Small Coms Sel SMLL 15.55 3.10 0.39% 0.53% 10.89% 0.00% 1.18% 12.68% Equity Australia Mid/Small Blend star2
Switzer Dividend Growth SWTZ 77.67 0.71 0.89% 0.49% 5.10% 0.00% 3.19% 3.91% Equity Australia Large Growth Not rated
SPDR? MSCI Australia Sel Hi Div Yld ETF SYI 188.25 -2.69 0.35% 0.07% 3.74% 6.50% 4.91% 8.59% Equity Australia Large Value star4
UBS IQ MSCI Australia Ethical ETF UBA 176.89 -1.01 0.17% 0.16% 7.13% 11.02% 3.99% 0.31% Equity Australia Large Blend star4
Vanguard Australian Shares High Yld ETF VHY 1,034.98 82.48 0.25% 0.06% 3.63% 9.87% 6.76% 5.98% Equity Australia Large Blend star4
BetaShares Aus Top 20 Eq Yld Maxmsr YMAX 405.20 -8.35 0.79% 0.18% 5.01% 6.51% 8.46% 10.96% Equity Australia Large Blend star4
ETFS S&P/ASX 300 High Yield Plus ETF ZYAU 43.68 14.26 0.35% 0.19% 4.08% 12.43% 9.95% 15.24% Equity Australia Large Blend star2
BetaShares Australian Div Harvester(mgd) HVST 272.72 -71.36 0.90% 0.10% 1.64% -9.07% 11.23% 15.94% Equity Australia Large Value star4
K2 Australian Small Cap Fund KSM 16.55 -2.02 2.70% 1.25% 8.66% 19.98% 9.61% 5.19% Alternative Strategies Not rated
BetaShares Australian Sustnby Ldrs ETF FAIR 53.03 53.03 0.49% N/A 0.00% 0.00% 0.24% 17.76% Equity Australia Large Blend star2
Source: ASX and Morningstar
Figure 43: Equity ETFs Global
NameCodeFUM ($M)Qtr Flows ($M)MERQtr Avg Spread3MTH Return12MTH ReturnHistorical YLDQTR AVG LiquiditySub CategorySTAR Rating
GLOBAL
Equities - Broad
iShares Global 100 AUD Hedged ETF IHOO 36.78 5.16 0.43% 0.34% 6.00% 20.43% 11.15% 7.84% Equity World - Currency Hedged star2
iShares Core MSCI World All Cap AUDH ETF IHWL 9.24 1.30 0.19% 0.25% 5.38% 19.32% 1.07% 9.43% Equity World - Currency Hedged star2
iShares Global 100 ETF (AU) IOO 1,338.17 18.09 0.40% 0.12% 11.97% 23.26% 1.92% 3.43% Equity World Large Blend star4
iShares MSCI EAFE ETF (AU) IVE 307.31 4.28 0.33% 0.24% 9.78% 23.68% 2.22% 11.58% Equity World Large Blend star3
iShares Core MSCI World All Cap ETF IWLD 20.23 5.04 0.16% 0.26% 5.62% 12.68% 1.45% 10.45% Equity World Large Blend star2
K2 Global Equities Fund (Hedge Fund) KII 20.33 -2.21 2.70% 1.37% 6.49% 18.22% 0.00% 4.04% Alternative Strategies Not rated
Magellan Global Equities MGE 980.89 36.48 1.35% 0.42% 6.51% 14.19% 1.65% 3.38% Equity World Large Blend Not rated
Magellan Global Equities Currency Hdg MHG 63.10 4.87 1.35% 0.57% 6.30% 22.99% 1.63% 4.37% Equity World - Currency Hedged Not rated
VanEck Vectors MSCI Wld ex Aus Qlty ETF QUAL 321.43 33.94 0.40% 0.13% 7.34% 16.56% 2.90% 6.84% Equity World Large Blend star4
UBS IQ MSCI World ex Australia Ethcl ETF UBW 25.29 0.98 0.35% 0.22% 5.73% 13.12% 1.77% 5.82% Equity World Large Blend star2
Vanguard All-World ex-US Shares ETF VEU 1,092.46 56.73 0.11% 0.11% 4.17% 16.80% 2.40% 4.62% Equity World Large Blend star4
Vanguard MSCI Index Intl (Hdg) ETF VGAD 374.13 45.43 0.21% 0.08% 5.52% 19.95% 4.85% 10.70% Equity World - Currency Hedged star4
Vanguard MSCI Index Intl ETF VGS 832.19 106.67 0.18% 0.07% 5.80% 13.41% 2.71% 10.00% Equity World Large Blend star4
SPDR? S&P World ex Australia(Hedged) ETF WXHG 79.39 3.35 0.35% 0.23% 5.50% 20.10% 2.83% 4.28% Equity World - Currency Hedged star3
SPDR? S&P World ex Australia ETF WXOZ 164.39 1.67 0.30% 0.18% 5.96% 13.88% 2.17% 1.76% Equity World Large Blend star3
Platinum International (Quoted Mngd Hdg) PIXX 124.97 82.46 1.10% N/A 6.55% 0.00% 0.00% 31.50% Equity World Large Blend Not rated
Equities - Sector
BetaShares Glb Banks ETF-Ccy Hdg BNKS 73.72 14.77 0.57% 0.26% 4.98% 18.71% 2.05% 15.26% Equity World Other star3
BetaShares Glb Healthcare ETF-Ccy Hdg DRUG 24.42 2.20 0.57% 0.31% 0.65% 17.56% 0.30% 10.73% Equity World Other star2
BetaShares Glb Agltr Coms ETF-Ccy Hdg FOOD 17.37 3.65 0.57% 0.32% 5.51% 16.07% 1.05% 22.06% Equity World Other star2
BetaShares Glb Energy Coms ETF-Ccy Hdg FUEL 12.12 4.60 0.57% 0.27% 6.18% 3.51% 3.72% 25.90% Equity Global Resources star2
Market Vectors Gold Miners ETF GDX 63.62 1.17 0.53% 0.34% 1.51% 2.89% 0.64% 5.69% Equity Global Resources star2
Betashares Global Cybersecurity ETF HACK 55.61 8.00 0.67% 0.26% 5.83% 9.39% 2.48% 16.79% Equity Global Technology star3
iShares Global Consumer Staples ETF (AU) IXI 122.13 -13.48 0.47% 0.36% 7.03% 15.27% 1.89% 4.52% Equity World Other star3
iShares Global Healthcare ETF (AU) IXJ 487.31 -0.66 0.47% 0.28% 6.97% 19.25% 1.26% 2.91% Equity World Other star3
iShares Global Telecom ETF (AU) IXP 49.67 29.28 0.47% 0.69% 6.08% 7.78% 2.93% 52.75% Equity World Other star2
BetaShares Glb Gold Miners ETF-Ccy Hdg MNRS 5.29 0.00 0.57% 0.48% -0.29% 1.61% 0.44% 22.92% Equity Global Resources star2
ETFS ROBO Glbl Robotics and Atmtn ETF ROBO 44.84 40.54 0.69% n/a 7.56% 0.00% 0.00% 69.27% Equity Global Technology star2
Equities - Strategy
AMP Capital Dynamic Markets ETF (Hedge) DMKT 25.53 5.30 0.50% 0.70% 2.70% 5.27% 4.81% 8.44% Multisector Balanced Not rated
BetaShares Global Sstnbty Ldrs ETF ETHI 126.39 27.97 0.59% 0.23% 6.06% 0.00% 1.31% 15.28% Equity World Large Blend star3
Schroder Real Return ETF GROW 45.25 2.42 0.90% 0.48% 2.14% 4.56% 2.54% 4.15% Multisector Balanced Not rated
Market Vectors Morningstar Wide Moat ETF MOAT 51.40 0.41 0.49% 0.28% 5.52% 12.86% 0.90% 11.55% Equity North America star3
SPDR? MSCI World Quality Mix QMIX 7.26 0.00 0.40% 0.28% 6.89% 13.27% 2.25% 3.80% Equity World Large Blend star2
ETFS Morningstar Global Technology ETF TECH 29.25 13.98 0.45% 0.33% 6.12% 0.00% 0.84% 22.15% Equity Global Technology star2
SPDR? S&P Global Dividend ETF WDIV 161.12 12.40 0.50% 0.20% 5.16% 8.84% 3.96% 9.67% Equity World Large Value star3
iShares Edge MSCI World Multifactor ETF WDMF 23.54 4.98 0.35% 0.45% 7.09% 17.89% 4.40% 10.71% Equity World Large Blend star2
BetaShares Managed Risk Global Share WRLD 42.27 -2.37 0.54% 0.18% 5.39% 11.99% 0.99% 12.30% Multisector Aggressive star3
iShares Edge MSCI World Minimum Vol ETF WVOL 12.40 0.00 0.30% 0.46% 5.44% 8.87% 2.49% 4.68% Equity World Large Blend star2
Montgomery Global Equities Fund (Managed Fund) MOGL 62.58 62.58 1.89% N/A 0.00% 0.00% 0.00% 14.35% Equity World Large Value Not rated
Source: ASX and Morningstar 
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IMPORTANT: This information is general advice only and has been prepared without considering your financial situation or objectives and you should consider if the information is appropriate for your circumstances before making an investment decision. Before acting on this information, please ensure that you read all relevant disclosure documents, including but not limited to, the Product Disclosure Statement (PDS) and Financial Services Guide (FSG). You may wish to speak to a financial advisor for further guidance. Numerical gures presented are accurate at the time of preparation and where required, further disclosure will be appropriately provided. Past performance cannot be relied upon for future performance. Information presented, gures quoted and diagrams are accurate as at 31 December 2017. Exchange listed managed funds are included in this report but not rated. Before making any investment decisions, please read the latest PDS provided by each ETF issuer and check all relevant ETF fees, as they are subject to change without notice.


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