Mastering Small Companies with Smart Beta
It has been difficult to take a passive approach to invest in Australian small companies - enter smart beta.
Smart beta is taking the investment world by storm however it has been difficult to take a passive approach to Australian small company investing with well known smart beta or factor approaches. Active managers have been able to outperform the S&P/ASX Small Ordinaries Index (Small Ords) while charging high management costs but many high pedigree managers are now capacity constrained and not open to new investors. Furthermore, the pursuit of low cost, transparent and liquid strategies are not typical attributes of active Australian small cap managed funds.
VanEck Vectors Small Companies Masters ETF (ASX: MVS) is the only smart beta small-caps strategy available on ASX. As at 30 April 2017, MVS has outperformed the Small Ords by 2.33% over the past twelve months.
Today we released our latest research: “Mastering small companies with smart beta”. The paper analyses the reasons why MVS’s smart beta index, the MVIS Australia Small-Cap Dividend Payers Index (MVS Index) has outperformed the Small Ords
The paper concludes that the outperformance is the result of its dividend filter which produces a portfolio that:
1. has a quality tilt,
2. Provides exposure to stocks with low volatility, and
3. Avoids the problem of positive skew.
We also observe that MVS Index:
• has better risk adjusted returns, and
• that a portfolio of small companies that only pay dividends has a value bias.
For more information on MVS click here
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 Small Companies Masters ETF ('Fund'). This is general information only and not financial advice. It does not take into account any person's individual objectives, financial situation or needs. Before making an investment decision in relation to the Fund, 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. 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 Small-Cap Dividend Payers Index ('MVS Index') is the exclusive property of MV Index Solutions GmbH based in Frankfurt, Germany ('MVIS'). MVIS makes no representation regarding the advisability of investing in the Fund. MVIS has contracted with Solactive AG to maintain and calculate the MVS Index. Solactive uses its best efforts to ensure that the MVS Index is calculated correctly. Irrespective of its obligations towards MVS, Solactive has no obligation to point out errors in the MVS Index to third parties.