The world of exchange-traded funds (ETFs) has been one of the highest-growth areas of the share market over the past decade.
ETFs were barely around a decade ago, with only a handful of offerings available back then. But fast forward to today, and the Australian ETF sector is estimated to be worth more than $65 billion, according to reporting in the Australian Financial Review (AFR). Investors can’t seem to get enough of low-cost index funds as well as thematic ETFs that offer easy exposure to entire industries in one single investment.
VanEck is a provider of ETFs in Australia and has several popular funds that ASX investors might be familiar with. These include the VanEck Vectors Australian Equal Weight ETF (ASX: MVW), the VanEck Vectors Morningstar Wide Moat ETF (ASX: MOAT) and the VanEck Vectors Gold Miners ETF (ASX: GDX). The latter has recently made headlines after appreciating more than 35% in 2020 so far.
But VanEck has just announced that it’s stable of ETFs is about to expand with 4 new offerings.
They will be:
- A Video Gaming and eSports ETF, with the proposed ticker code of ESPO
- A Global Healthcare Leaders ETF, with the proposed ticker code of HLTH
- A Morningstar World ex Australia Wide Moat ETF, with the proposed ticker code of GOAT
- A Morningstar Australian Moat Income ETF, with the proposed ticker code of DVDY
4 new VanEck ETFs to hit the market
The Video Gaming and eSports ETF will be an interesting addition, as (to my knowledge) there is no equivalent fund yet listed on the ASX. It will likely include US-based gaming shares like Activision Blizzard, Take-Two Interactive and EA Games. It might also include the US-listed giant Microsoft, which owns the Xbox brand of consoles. Japanese-listed gaming giants Sony (maker of PlayStation) and Nintendo (owner of the Pokemon and Mario brands) would also likely be considered. Chinese gaming giant Tencent Holdings is also a possibility.
In contrast, there are already a few ETF options to choose from that cover the global healthcare sector. These include the iShares Global Healthcare ETF (ASX: IXJ) and the BetaShares Global Healthcare ETF – Currency Hedged (ASX: DRUG). Both of these funds own global healthcare giants like Johnson & Johnson, Roche and Pfizer. It will be interesting to see if this new VanEck fund will follow a similar mould. According to VanEck, the new fund will differentiate itself by only holding companies that were “world selected for their financial fundamentals focused on ‘growth at a reasonable price'”.
The Morningstar World ex Australia Wide Moat ETF looks to be modelled on VanEck’s successful MOAT ETF. It only holds US-based companies that display characteristics of a ‘moat’ or a sustainable competitive advantage. The new GOAT ETF will likely expand this framework for shares outside the US and Australia.
Finally, the new DVDY fund looks to join the likes of the Vanguard Australian Shares High Yield ETF (ASX: VHY) and the iShares S&P/ASX Dividend Opportunities ETF (ASX: IHD) in selecting only high dividend payers for the ETF. Like MOAT and GOAT, DVDY will rely on analysis from Morningstar to determine which shares to hold. These will apparently be selected for their “quality, financial health and high dividends”.
I think when it comes to ETFs, the more choice and competition, the better. The variety gives ASX investors the ability to select funds that might be tailored to their specific circumstances. It will also assist with keeping fees low across the board. Thus, I’m happy to see some new VanEck EFTs join the ASX space. I look forward to seeing how these funds go at launch.