ETF provider VanEck has launched an Australian quality ETF as it continues to expand its range of domestic and international options for local investors.
The VanEck MSCI Australian Quality Plus ETF, trading under the ticker AQTY, began trading on the ASX on 1 June.
Using a purpose-built index developed with MSCI, it selects 50 Australian companies based on financial strength, pricing discipline and resilience, rather than market capitalisation.
Rebalanced quarterly, AQTY charges a 0.35 per cent annual management fee and pays two dividends a year.
According to the firm, it is the first Australian equity ETF using an optimised methodology designed specifically to engineer a ‘quality’ investment outcome. VanEck developed this new strategy by converting its existing fund, the Morningstar Australian Moat Income ETF (DVDY).
VanEck Asia Pacific chief executive and managing director Arian Neiron said the ETF was designed specifically to address structural challenges in the local sharemarket, which have historically made it difficult to achieve conventional quality investing.
“Quality investing is well understood globally, but Australia is not a standard market. It is concentrated, cyclical and dominated by sectors that can distort traditional factor outcomes. Applying a conventional quality screen to Australian equities has historically left investors exposed to the very risks they were seeking to manage,” Neiron said.
He said the “critical distinction” in its approach to quality investing is that it goes beyond identifying companies with durable financial strength by incorporating valuation discipline and defensive portfolio construction to navigate market volatility.
The launch comes at an interesting time for the Australian sharemarket, according to VanEck.
Recent policy developments, including Federal Budget changes, have prompted many investors to reconsider how they position portfolios for the years ahead.
The firm pointed to signs of a shift in ASX market leadership, arguing that a $30 billion wipeout in Commonwealth Bank’s market value earlier this month may mark the beginning of a broader change in market dominance.
Banks are seen as vulnerable to negative gearing and capital gains tax (CGT) changes as they could slow mortgage lending growth.
Additionally, CBA’s wipeout came as BHP surged to record highs on stronger copper prices, reclaiming its position as the ASX’s largest listed company and fuelling talk of a potential mining supercycle.
Against this backdrop, and with elevated valuations persisting in parts of the market, VanEck argued the investment environment is becoming increasingly selective.
It said this makes quality investing “highly relevant”, but only when tailored to Australia’s market structure and focused on companies with durable financial strength, resilience, and valuation discipline.
The launch also marks another step in the firm’s steady expansion of its ETF range, following the introduction of three diversified active ETFs at the end of April.
Covering balanced, growth and high growth options, each fund is designed to provide single-trade exposure to globally diversified portfolios across Australian and international equities, fixed income and real assets such as global listed infrastructure, property and gold.
