New ETFs = Even better investment outcomes
Specialist ETF research house, AltaVista Research, has announced the addition of 8 newly issued ETFs to their research universe. These include 4 funds from Market Vectors funds (MVB, MVA, MVR and MVE), 3 International funds from State Street Global Advisors (WEMG, WDIV and DJRE) and Vanguard’s new Emerging Markets ETF (VGE).
The new ETFs on offer are a welcome step forward and will begin to engender more confidence to invest in ETFs given the wider and deeper universe of funds available.
Advisors are now able to select from a growing number of “peer” ETFs. There are now 3 Emerging Markets ETFs, 3 Domestic Property ETFs and 4 Resources ETFs to select from. This adds to the pre-existing peer fund groupings of broad-based Australian equities, High Yield and US Equities, not to mention the fixed interest funds.
With the new funds available, advisors can deliver better outcomes when delivering ETF cores for clients. For example, the new funds offer the ability to tilt specifically to the Banking sector or to Global Real Estate, to choose new funds that, according to our research, offer better investment outcomes and to blend better and more diversified portfolios tailored specifically to client needs.
We see continued product structuring innovation that eliminates the need for the W8-BEN forms – this is the new minimum requirement for US exposed ETFs – in combination with reduced fee structures. We also observe that issuers are not delivering simple “me-too” products. This is a measure of issuer’s deciding on how to differentiate to provide real ETF investment choice.
Market Vectors deliver their own indices through van Eck Global and we now see 3 different Emerging Markets Funds from 3 different Index providers – FTSE, MSCI and S&P. The differences in the way the Indices are constructed will primarily contribute to differences in long term investor outcomes. Yes while lower fees are advantageous, the necessary research focus is in how you assess the “investment merit” of the ETF’s actual underlying securities.
In our research view, ETFs are “selections of securities that track a nominated index” and, accordingly, quantitative research that is updated daily and forward looking is most relevant when assessing ETFs. This approach helps to deliver better investment selection and investment outcomes in the client’s best interests.
An added implication of the increased product competition is that Dealer Groups need to be very aware of the implications of these new funds and consider potentially adding to / changing their Approved Product Lists.
Journalist Notes:
About AltaVista Research
AltaVista Research is a fully independent research house. It derives no income from any product issuer or fund manager. It only receives income from clients through research subscriptions and the provision of Model Portfolio offerings. To date, our clientele includes financial advisors, accountants, stockbrokers, Dealer Groups and other advice giving entities.
AltaVista Research Pty Ltd is part of the Independent Investment Research group of entities (IIR). IIR was founded in 1999 and commenced trading as Aegis Equities Research. Part of the Aegis equities research and Aegis brand was sold to Morningstar in 2010. Some senior executives of Aegis retained part of the research business including research for ETFs and LICs. IIR then entered into a licence agreement for ETF research with AltaVista Research LLC in the US.
AltaVista Research LLC was founded in the US in early 2004 to provide research on the rapidly growing number of Exchange Traded Funds. In Australia, AltaVista delivers three core research services:
Fundamentals-driven and forward-looking research on both Equities and Fixed Interest ETFs
ETF-only Model Portfolios – both SAA and TAA
Customised Model Portfolios
AltaVista delivers all the relevant daily updated investment fundamentals information in one place and format, allows for fund and portfolio reporting, comparison, asset allocation insights and have recently added the ability to blend both equities and fixed interest ETFs together in their proprietary Portfolio Builder.
AltaVista’s “best-of-breed” offering comprises its proprietary quantitative research on 53 equities-based and 10 Fixed interest-based ETFs on the ASX and their suite of embedded SAA Model Portfolios. In the US, AltaVista also covers over 790 Equities ETFs listed on the NYSE.
Contact:
Michael Turner
Head of Sales & Corporate Development
E: michael.turner@altavistaresearch.com.au
M: 0431 761 931