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New ETFs from ANZ, Betashares, AMP and Magellan

ETF Watch - Aug 09, 2016

After a reasonably slow start to the year, there’s been a flurry new ETFs listed over the last couple of months covering a broad range of focus areas. This includes everything from large cap focused global funds, to niche industries, and a couple of actively managed ETFs, a trend that shows no signs of abating. Today we’re going to take a brief look at the eight new listings over the last two months.

Betashares Global Energy Companies ETF – Currency Hedged (FUEL)

Launched 16 June 2016

Betashares has a knack of coming up with ticker codes that well characterise the focus of the ETF that they represent. With the ticker of ‘FUEL’ for an energy ETF, this one is no exception. FUEL has been built to invest in the largest global energy companies by market capitalisation and has names like Chevron, Exxon Mobil and BP in its top holdings and the fund primarily focuses on oil and gas stocks. To ensure global exposure, Australian listed companies like Woodside Petroleum have been excluded.

Like most of Betashares’ offerings (including those covered below), this ETF fills a niche, being the only ETF dedicated to energy stocks, with the other offerings on the market either focusing on physical commodities or commodity stocks that include energy and hard commodities. Management costs for this ETF are 0.47%pa.

ANZ ETFS EURO STOXX 50 ETF (ESTX)

Launched 21 July 2016

The latest offering from the ANZ & ETFS partnership is a European equity focused ETF. It is a fund designed to track the biggest of the biggest in European companies, covering 50 of the largest stocks from 12 European countries (excluding the UK). There’s plenty of household names in the index, including Bayer, Siemens, SAP, Unilever, L’Oreal and Allianz.

We had a look at the European domiciled ETFs back when Brexit was the hot topic in town. There are four other European focused ETFs available on the ASX, most of which have broader exposure than ESTX, which is heavily concentrated to large caps. For those looking for large cap European exposure ESTX may meet their niche. Management costs are a reasonable 0.35% pa which is equivalent to the lowest cost European offering, Vanguard’s FTSE Europe Shares ETF (VEQ).

Magellan Infrastructure Fund - Currency Hedged (MICH)

Launched 22 July 2016

After the success of their first Exchange Traded Managed Fund (ETMF), the Magellan Global Equities Fund (MGE), which now boasts a market cap of $540m from a standing start less than 18 months ago, Magellan have launched their next foray into the ETF market. Their previously unlisted Infrastructure Fund has been launched as an ASX tradeable ETMF. The fund as the title suggests focuses on infrastructure investments, with a concentrated portfolio of 20-40 investments that Magellan deems to be investment grade.

MICH isn’t the only fund of its type. LIC veteran Argo has their $260m Global Infrastructure Fund (ALI) Listed Investment Company, which was launched around 12 months ago, and AMP have recently launched their version of a global infrastructure fund (GLIN) (although theirs is not hedged to currency movements). For those not looking for active management VanEck have a Global Infrastructure ETF (IFRA).

Magellan has somewhat of a cult following in the funds management world, so for those who are fans of their approach, their new infrastructure fund may provide some extra diversification to your portfolio. Management costs are 1.05% pa.

Betashares Global Gold Miners ETF – Currency Hedged (MNRS)

Launched 29 July 2016

With Gold currently undergoing its biggest bull run in years, this may be the best timed launch of the lot. The fund tracks the largest gold miners by market cap (excluding Australia) and includes names like Barrick, Newmont and Goldcorp. Australian listed gold miners represent about 12% of global gold miners by market cap, so without Australia represented, Canadian listed miners make up close to 60% of the fund.

We had a look at Gold ETFs in a previous post, with the majority of the gold ETFs focusing on the physical commodity. Vaneck’s Gold Miners ETF (GDX) includes the 12% of the market made up of Australian stocks (and does not currency hedge). For those looking for Gold Miner exposure without the Australian influence but with currency fluctuations taken out, this new offering from Betashares may be appealing. The fund has management costs of 0.47% pa.

Betashares Global Banks ETF – Currency Hedged (BNKS)

Launched 1 August 2016

They are the companies we love to hate, but a necessary evil they are. Banks get a lot of focus in Australia, with the big 4 banks dominating the Australian market cap weighted indexes. Our banks are some of the biggest in the world, but CBA, our biggest bank is still only the 14th largest in the world. The BNKS fund includes names like JPMorgan, Bank of America, Citigroup and HSBC, with around 35% exposure to US banks.

For investors looking for exposure to Australian banks, plenty of options exist, with Vaneck, Betashares and SPDR all offering Australian Banks/Financials ETFs. Even a broad based market cap ETF will see around 30% exposure to big 4 banks due to their sheer size in the Australian market. BNKS is the only ETF offering global banking exposure. Many see an investment in banks as a an investment in global growth, so for those who are bullish on the global economy, this may be an opportunity to directly invest in this. The fund has management costs of 0.47% pa.

AMP Capital Dynamic Markets Fund (DMKT)

Launched 3 August 2016

We wrote about AMP & Betashares partnership to launch a range of Exchange Traded Managed Funds when we did a deep dive into Exchange Traded Managed FundsDMKT is the latest foray into this space. This fund is for the investor who wants to put total faith into the skills of the fund manager, with a dynamic asset allocation depending on the manager’s thoughts on the direct of markets. Generally a diversified fund has a target asset allocation based on the principles applied within Modern Portfolio Theory, not this one, with the manager given total discretion to set the asset allocation based on their forecasts. The fund does not have a traditional benchmark, rather it attempts to outperform inflation by 4.5% pa.

The latest performance report for the unlisted version of this fund shows an average of 7.6% pa return after fees since inception in September 2011, and a current growth/defensive asset split of 71%/29%. Its performance to date has outperformed the inflation +4.5% objective. We’d be interested to see how this performs over a longer market cycle but it may be appealing to those investors who aren’t interested in developing their own diversified portfolio and would rather leave it in the hands of a fund manager. The fund has management fees of 0.48% pa, which we think is pretty reasonable for a fund of this nature.

Betashares Global Agriculture Companies ETF – Currency Hedged (FOOD)

Launched 4 August 2016

Another sector specific offering from Betashares, FOOD focuses on global agricultural companies, and again excludes Australia’s listed agricultural companies (which is surprisingly small anyway). The specific sectors that make up FOOD include packaged foods (30%), fertilisers & chemicals (25%), agricultural products (20%) and machinery (13%), so whilst it may appear quite concentrated, it is actually quite diversified across the entire food production supply chain. The US makes up 47% of exposure, with the rest of the exposure split between the Americas, Europe and Asia.

For those looking for agricultural exposure, Betashares have a second offering, their Agricultural ETF (QAG). QAG invests in the derivatives that represent the physical agricultural commodities (eg, Corn, Wheat, Sugar), so is quite different to FOOD. As a result FOOD represents another niche for those looking to invest in the broader agriculture sector. FOOD has management fees of 0.47% pa.

Betashares Global Healthcare ETF – Currency Hedged (DRUG)

Launched 8 August 2016

The final new ETF listing, and another sector specific offering by Betashares, with an aptly named ticker ‘DRUG’. DRUG focuses on global healthcare stocks, excluding those listed in Australia. The United States makes up around 60% of the index, and a couple of large Swiss companies brings Switzerland in as the second highest weighting at 14%.

iShares also offer a Global Healthcare ETF (IXJ), which follows a different index to the Betashares offering but does have a similar allocation. The key differences with the iShares product is it includes Australian healthcare stocks, which admittedly only make up 1.5% of the index, and it is also domiciled in US dollars, meaning Australian investors have the added currency risk. Finally, the iShares product is a cross listed product which means it is domiciled in the US, not Australia and there may be additional tax consequences for Australian investors. As a result for an investor looking for exposure to the global healthcare sector, but wanting to keep their exposure in Australian dollars, DRUG may have a place in your portfolio. Both DRUG and IXJ have management costs of 0.47% pa.

There we go, eight new interesting and diverse offerings, we’ll keep monitoring new listings and complete similar posts on any new funds launched through the rest of the year.

 

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