Australian broad cap equities prove a pretty strong case for active management, with only one exchange-traded fund (ETF) producing top quartile returns for the year to last month’s end.
While the ETF market has grown significantly this year, and appetite for passive-style investing is on the rise, the numbers say active funds are still trumping their passive peers.
Data from FE Analytics shows that only one ETF, the VanEck Australian Equal Weight ETF, has scraped into the top quartile with returns of 3.99 per cent.
But, while it’s on the lower-end of the top performing Aussie broad cap equities, it’s still outperforming the MVIS Australia Equal Weight index, which returned -3.26 per cent for the year to date and is the index it aims to track.
The ETF holds around a quarter of the portfolio in basic materials, with companies like Rio Tinto, Evolution Mining and BHP Billiton pulling the weight in terms of holdings. It also holds 20.39 per cent in financials, which have dropped slightly this year but still remained one of the top performing sectors in Australia this year.
Aside from the VanEck Australian Equal Weight ETF though, the rest of the top quartile funds are actively managed, with consistent fund managers like DDH, Lincoln, Alphinity, Platypus and SGH pulling between 14.94 per cent and 7.11 per cent returns for the year to last month’s end.
These numbers sit well above VanEck’s ETF, which pulled just under four per cent.
The next best-performing ETFs are BlackRock’s iShares Edge MSCI Australia Minimum Volatility ETF, which returned 3.13 per cent for the year to last month’s end.
Again, while compared to its actively managed peers its sitting outside the top quartile, compared to the index its designed to track, the MSCI Australian IMI Select Min Vol index, which returned 3.25 per cent for the year to 31 October, its sitting pretty on track.
The chart below shows the performance of the top three ETFs as compared to the top three actively managed funds for the year to last month’s end.
