Looking at the most popular exchange-traded funds (ETFs) on the ASX, it's obvious that the ones Australian investors tend to go for are of the index fund variety. Thematic ETFs that track single commodities are lower down the pecking order, and funds that follow specific investing strategies, lower still. However, that's not to say these funds aren't growing in popularity. The VanEck MSCI International Value ETF (ASX: VLUE) is one of those funds.
This ETF from provider VanEck now has more than $400 million in funds under management. So there are a few ASX investors out there who like the look of what this ETF has to offer. So today, let's go over how this fund works and what you're actually buying when purchasing VLUE units.
So, the VanEck MSCI International Value ETF is a diversified, globally-focused ETF that invests in an underlying portfolio of about 250 mid and large-cap stocks from developed markets.
These ~250 stocks are selected after screening on an ethical basis, and then being assessed on a number of 'value' metrics. These include price-to-book (P/B) value, price-to-earnings (P/E) multiples, and cash flow.
The companies that score highest on a combination of these metrics are selected for the MSCI World ex Australia Enhanced Value Top 250 Select Index, and thus, for the VLUE ETF.
Image source: Getty Images
What stocks are you buying with the VLUE ETF?
At present (as of 31 January anyway), the United States contributes the largest number of stocks to VLUE's portfolio at 44.5%. This is followed by Japan (22.3%), the UK (6.5%), Germany (6.2%), and France (6.1%). Other countries that appear include Spain, Italy, China, Israel, and Finland.
Here are the current ten largest holdings in the VanEck MSCI International Value ETF, as well as their respective weighting in the VLUE portfolio:
- Micron Technology Inc (NASDAQ: MU)
- Cisco Systems Inc (NASDAQ: CSCO)
- Intel Corp (NASDAQ: INTC)
- Verizon Communications Inc (NYSE: VZ)
- Toyota Motor Corp (TYO: 7203)
- AT&T Inc (NYSE: T)
- Qualcomm Inc (NASDAQ: QCOM)
- Comcast Corp (NASDAQ: CMCSA)
- Merck & Co Inc (NYSE: MRK)
- Mitsui & Co Ltd (TYO: 8031)
Let's talk performance, though.
The VanEck MSCI International Value ETF began ASX life in March 2021. Since then, VLUE units have returned an average of 14.53% per annum. That stretches to 19.64% per annum over the past three years. That's pretty good, although not quite up to the 21.05% per annum that the broader US-based iShares S&P 500 ETF (ASX: IVV) has returned over the same period (although the Magnificent 7 has helped that mightily).
The VanEck MSCI International Value ETF charges a management fee of 0.4% per annum.
