Which bank?
It’s likely every Australian share portfolio will hold at least one of Australian bank.
But picking the right bank is difficult.
But picking the right bank is difficult.
It’s likely every Australian share portfolio will hold at least one of Australian bank. But picking the right bank is difficult. You can see below, over the last five calendar years three of the “big four” banks have been the best performer at least once. Only picking one bank is called stock pick risk. You’re betting on just one stock.
Source: Factset, as at 31 December 2019; Total Return, calendar year returns ending December.
Prudent investors look to diversify within and across asset classes. A portfolio that includes all the banks reduces stock pick risk.
The MVIS Australia Banks Index tracks the performance of the largest and most liquid banks with exposure to any single bank capped at 20%. The table below provides a breakdown of the MVIS Australia Banks Index at its most recent re-balance in June this year. The index includes the most liquid Australia banks with exposure to any single bank capped at 20%.
Investing in an ETF which tracks the MVIS Australia Banks Index reduces stock pick risk and takes the guess work out of determining which bank is going to perform best by providing you with exposure to the entire Australian banking sector.
Source: Factset, as at 31 December 2019; Total Return, calendar year returns ending December.
Prudent investors look to diversify within and across asset classes. A portfolio that includes all the banks reduces stock pick risk.
The MVIS Australia Banks Index tracks the performance of the largest and most liquid banks with exposure to any single bank capped at 20%. The table below provides a breakdown of the MVIS Australia Banks Index at its most recent re-balance in June this year. The index includes the most liquid Australia banks with exposure to any single bank capped at 20%.
Name |
Weight (Capped) |
COMMONWEALTH BANK OF AUSTRALIA |
20.00% |
WESTPAC BANKING CORP |
20.00% |
NATIONAL AUSTRALIA BANK LTD |
20.00% |
AUST AND NZ BANKING GROUP |
20.00% |
MACQUARIE GROUP LTD |
16.95% |
BENDIGO AND ADELAIDE BANK |
1.65% |
BANK OF QUEENSLAND LTD |
1.40% |
Investing in an ETF which tracks the MVIS Australia Banks Index reduces stock pick risk and takes the guess work out of determining which bank is going to perform best by providing you with exposure to the entire Australian banking sector.
Published: 01 July 2020
IMPORTANT NOTICE: This information is issued by VanEck Investments Limited ABN 22 146 596 116 AFSL 416755 (‘VanEck’) as responsible entity and issuer of the VanEck Vectors Australian Banks ETF (‘Fund’). This information contains general advice only about financial products and is not personal financial advice. It does not take into account any person’s individual objectives, financial situation or needs. Before making an investment decision, you should read the PDS and with the assistance of a financial adviser consider if it is appropriate for your circumstances. The PDS is available at www.vaneck.com.au or by calling 1300 68 38 37. The Fund is subject to investment risk, including possible loss of capital invested. The PDS details the key risks. Past performance is not a reliable indicator of future performance. No member of the VanEck group of companies gives any guarantee or assurance as to the repayment of capital, the payment of income, the performance, or any particular rate of return from the Fund.
MVIS Australia Banks Index (‘MVIS Index’) is the exclusive property of MV Index Solutions GmbH based in Frankfurt, Germany (‘MVIS’). MVIS is a related entity of VanEck. MVIS makes no representation regarding the advisability of investing in the Fund. MVIS has contracted with Solactive AG to maintain and calculate the MVIS Index. Solactive uses its best efforts to ensure that the MVIS Index is calculated correctly. Irrespective of its obligations towards MVIS, Solactive has no obligation to point out errors in the MVIS Index to third parties.
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