2019 ETF Research Report, ETF Market Update

New ETFs

A summary of all the newly listed ASX ETFs over the past year.

Over the past year there have been 24 new ETFs launched (up from 23 last year).

new_etfs
24 New ETFs Launched from March 2018 to March 2019.

Going global

17 out of the 24 new products were Global Share ETFs. Issuers such as BetaShares, ETF Securities and VanEck Vectors are keen to play in the Global Sector and Strategy category and launched ETFs to appeal to Australian’s appetite for tactical tilts and thematics.

For example, investors after access to the global technology sector can now use the new BetaShares Asia Technology Tigers ETF (ASIA), BetaShares Global Robotics and Artificial Intelligence ETF (RBTZ), ETFS S&P Biotech ETF (CURE), ETFS Battery Tech & Lithium ETF (ACDC) or VanEck China New Economy ETF (CNEW).

The above products are the latest additions to the collection suite of Global Technology ETFs such as NDQ, TECH, HACK and ROBO.

Fixed income to the rescue

2018 was a bumpy ride for investors, with 98% of asset classes falling, which is even a higher percentage than the global financial crisis in 2008.

This partly fuelled growing demand for defensive asset classes to cushion investors from share market volatility and resulted in the launch of 4 new Bond ETFs.

This includes 2 active ETFs – BetaShares Legg Mason Australian Bond Fund (Managed Fund) (BNDS) and ActiveX Ardea Real Outcome Bond Fund (Managed Fund) (XARO).

Vanguard launched the first and only ethical fixed income ETF on the market with the Vanguard Ethically Conscious Global Aggregate Bond Index (Hedged) ETF (VEFI).

BetaShares launched the BetaShares Australian Investment Grade Bond ETF (CRED) to compete with the Corporate Bond ETFs offered by Vanguard, VanEck and Russell, due to the rising demand for investment grade bonds. Click here to see the 3 Australian bond ETFs we reviewed earlier this year.

Active managers trying to remain relevant

7 out of the 24 new ETFs launched were those run by active strategies not tracking a particular index/benchmark. Well known fund managers like Fidelity, Legg Mason and Antipodes put their hat in the circle to launch their managed fund strategies within an ETF-like wrapper to access retail distribution.

Interestingly Vanguard moved away from their traditional ultra-low-cost passive product suite, and launched 2 active quantitative strategies – Vanguard Global Value Equity Active ETF (Managed Fund) (VVLU) and Vanguard Global Minimum Volatility Active ETF (Managed Fund) (VMIN).

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Factorific!

Vanguard and BetaShares showed they’re keen to cater to investors wanting exposure to smart beta ETFs such as factor investing as an avenue to try and outperform traditional benchmarks. Click here to find out more about factor investing and Stockspot’s view on it.

The following smart beta factor related products were launched:

  • Quality: BetaShares is going toe-to-toe with VanEck Vectors with their new BetaShares Global Quality Leaders ETF (QLTY). VanEck subsequently launched a hedged version of their strategy with the VanEck Vectors MSCI World Ex-Australia Quality (Hedged) ETF (QHAL)
  • Value: Vanguard Global Value Equity Active ETF (Managed Fund) (VVLU)
  • Minimum Volatility: Vanguard Global Minimum Volatility Active ETF (Managed Fund) (VMIN)
  • Yield/Income: BetaShares Global Income Leaders ETF (INCM)
  • Size: Vanguard MSCI International Small Companies Index ETF (VISM)
  • Multifactor: Vaneck Vectors MSCI Multifactor Emerging Markets Equity ETF (EMKT)

ETF providers will launch a new product if it makes commercial sense where they can attract money, cover their operating costs, and ultimately turn it into a profitable product. ‘Feed the ducks while they’re quacking‘ so the saying goes.

We question whether launching ETFs (or any financial product for that matter) based on what’s the flavour of the month is the right thing to do for the end investor since it typically leads to retail investors entering investment themes after they have already outperformed and usually before a period of underperformance.

It’s a reminder of the importance of getting sound advice and having a fiduciary financial adviser to assist with selecting ETFs that are really in your best interest. Often the best sounding or best marketed products are not the ones you want to own.

New ETFs summary table by launch date (March 2018 – March 2019)

ASX CodeETF NameSectorFeeLaunch Date
EMKT Vaneck Vectors MSCI Multifactor Emerging Markets Equity ETF Global Shares (broad market)0.69%Apr-18
VMINVanguard Global Minimum Volatility Active ETF (Managed Fund)Global Shares (active)0.28%Apr-18
VVLUVanguard Global Value Equity Active ETF (Managed Fund)Global Shares (active)0.28%Apr-18
A200 Betashares Australia 200 ETFAustralian Shares (broad market) 0.07%May-18
EIGAeInvest Income Generator Fund (Managed Fund)Australian Shares (active)0.80%May-18
INIFInvestSMART Australian Equity Income Fund (Managed Fund)Australian Shares (active)1.24%Jun-18
CREDBetaShares Australian Investment Grade Bond ETF Fixed Income & Cash 0.25%Jun-18
ASIABetaShares Asia Technology Tigers ETFGlobal Shares (sectors)0.67%Sep-18
ACDCETFS Battery Tech & Lithium ETFGlobal Shares (sectors)0.82%Sep-18
RBTZBetaShares Global Robotics and Artificial Intelligence ETFGlobal Shares (sectors)0.57%Sep-18
VESGVanguard Ethically Conscious International Shares Index ETFGlobal Shares (strategies)0.18%Sep-18
WCMQWCM Quality Global Growth Fund (Quoted Managed Fund)Global Shares (active)1.35%Sep-18
VEFIVanguard Ethically Conscious Global Aggregate Bond Index (Hedged) ETFFixed Income & Cash 0.26%Sep-18
INCMBetaShares Global Income Leaders ETFGlobal Shares (broad market)0.45%Oct-18
VBLDVanguard Global Infrastructure Index ETFGlobal Shares (sectors)0.47%Oct-18
AGX1Antipodes Global Shares (Quoted Managed Fund)Global Shares (active)1.10%Nov-18
CNEWVanEck Vectors China New Economy ETFGlobal Shares (sectors)0.95%Nov-18
FEMXFidelity Global Emerging Markets Fund (Managed Fund)Global Shares (active)0.99%Nov-18
CUREETFS S&P Biotech ETFGlobal Shares (sectors)0.45%Nov-18
QLTYBetaShares Global Quality Leaders ETFGlobal Shares (strategies)0.35%Nov-18
VISMVanguard MSCI International Small Companies Index ETFGlobal Shares (strategies)0.32%Nov-18
BNDSBetaShares Legg Mason Australian Bond Fund (Managed Fund)Fixed Income & Cash 0.42%Nov-18
XAROActiveX Ardea Real Outcome Bond Fund (Managed Fund)Fixed Income & Cash 0.50%Dec-18
QHALVanEck Vectors MSCI World Ex-Australia Quality (Hedged) ETFGlobal Shares (strategies)0.43%Mar-19

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Investment Associate

Marc has over 5 years experience in the financials services industry having previously worked for Morgan Stanley, AMP and KPMG. He holds a Bachelor of Business (Finance/Accounting) from the University of Technology Sydney (UTS), and has completed his Chartered Financial Analyst (CFA) Level 1.

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