ETF monthly wrap-up
Christine St Anne  |  30/10/2012Text size  Decrease  Increase  |  

Christine St Anne: In this month's exchange traded fund or ETF wrap up. I'm joined by Alex Prineas, who talks to us about how the products have performed and the new product from UBS.

Alex welcome.

Alex Prineas: Thanks, Christine.

St Anne: Alex, so, what were the best performing ETFs in the month of September?

Prineas: The best performing ETFs were mostly commodity related. So, we saw an announcement of policy from the US Federal Reserve. It's been dubbed QE-Infinity. It's basically a commitment to continue the policy of quantitative easing indefinitely.

So, that has all sorts of repercussions some of which have do with possibly debasing the US dollar and so precious metal ETFs were popular in September. So, we saw things like ETFS Physical Silver was up more than 12 per cent and we also saw strong runs from the ETFS Physical Platinum and BetaShares gold bullion.

There were also some industrial and energy products that also did well. So, ETFS Natural Gas and ETFS Industrial Commodities ETF were both up more than 10 per cent each. The only non-commodity related ETF that performed strongly although it was in the top 10 over the month was iShares MSCI Hong Kong product, but we know that the Hong Kong dollar is pegged to the US dollar. So, when you get an announcement quantitative easing, you can't say a liquidity injection into Hong Kong, so that may have been related.

St Anne: The not so good performers?

Prineas: Well, funnily enough, the worst performing ETFs were also commodity related products and I think that highlights in the short run, the commodity complex doesn't necessarily move in unison, but the worst performing products were more agricultural or oil related. So, we saw ETFS Agriculture and BetaShares Crude Oil both down around 5 per cent. Oil prices were limited during the month by an oil production pledge from Saudi Arabia and then it wasn't surprising to see some weakness in agricultural commodity prices. They had a very strong run in the previous few months on the back of the U.S. drought.

I guess commodity prices can be volatile and they can also be un-correlated to other asset classes they can be affected by things like crop yields, the weather, political decisions. So we often see commodity related ETFs at the top or bottom of performance tables in the short run and this month they dominated both the top and the bottom of the tables.

St Anne: Alex, UBS has recently launched a new ETF product. Can you give us an insight into this product and how it differs from the existing ETFs out there in the market?

Prineas: Yeah, the UBS product is an interesting one and it's based on buy ratings from UBS's fundamental equity research team. They have some quality filters overlaid, so you end up with a 40 stock portfolio. But ultimately I guess you could say it is a rules based ETF, but those rules are based on an underlying group of equity investors looking for attractive stocks.

So, UBS can't market it as an active ETF, because the regulation in Australia doesn't allow that. But essentially it is an ETF with an active stock selection component to it or a listed fund, I guess you could call it. The pricing also suggests that that's where it's pitched with a fee of 0.7 per cent. Looks quite expensive if you compare it to passive or index based ETFs. But if you compare it to an actively managed fund, say your average Australian shares, unit trust or super fund, the pricing looks more competitive. So, UBS's product is an interesting development. It's an example of the lines being blurred between ETFs and actively managed unit trusts or funds.

St Anne: Alex, thanks so much for your insights today.

Prineas: Thanks Christine.

Video Archive...

to Morningstar Premium Membership

Accessing global growth
08/05/2014  A range of listed investment opportunities allow investors access to a myriad of offshore companies.
The rise and rise of ETFs
01/11/2013  Morningstar’s Alex Prineas takes a look at the rapid growth of Australia’s ETF market.
Getting to know global ETFs
22/07/2013  Exchange-traded funds provide investors with a cost-effective way to access global companies.
Investing in Exchange-traded Australian Government Bonds
28/06/2013  Morningstar's Nicholas Yaxley provides an insight into how investors can access the new exchanged-traded bonds.
ETF quarterly wrap-up
21/05/2013  This quarter's wrap-up takes a look at the top performers and international ETFs.
VIDEO l ETF quarterly wrap-up
18/02/2013  This quarter's wrap-up takes a look at the top performers and the popularity of ETFs over managed funds
Finding value in the market
20/11/2012  Russell Investments has found new value opportunities in the Australian market after rebalancing its value ETF.
ETF monthly wrap-up
30/10/2012  This month's wrap-up takes a closer look at the new ETF product offered by UBS.
A customised approach to ETFs
26/10/2012  UBS has offered investors a new ETF that is different to the existing passive offerings of its peers.
ETF monthly wrap-up
04/10/2012  In the latest Morningstar ETF monthly report, we look at the popularity of high-dividend ETFs.
ETF monthly wrap-up
30/07/2012  This month we look at the newest listed vehicle, a BEAR product that aims to outperform in down markets.
ETF monthly wrap-up
11/07/2012  In the latest Morningstar ETF monthly report, we take a closer look at the recently launched exchange-traded commodities.
Top-yielding stocks unveiled
24/04/2012  Russell Investments recently made changes to its high-dividend ETF pushing a number of new companies into the index’s top 10 holdings.
Putting the income in your portfolio
10/04/2012  How the new fixed-income ETFs fit in your portfolio and how they compare with term deposits.
ETF monthly wrap-up
27/03/2012  In the latest Morningstar ETF monthly report we take a closer look at an actively-managed ETF.
The ins and outs of fixed-income ETFs
16/03/2012  Morningstar co-head of research Tim Murphy looks at the new fixed-income ETFs in detail including the indexes behind these products.
ETFs: What are my choices?
--  Country specific, sector specific and different blends of our ASX - what are our choices?
The ABC of ETF investing
--  Morningstar's Tim Murphy explains ETFs and how they fit into a portfolio.
ETFs: All you need to know 6
20/12/2010  Morningstar's Tim Murphy delivers a comprehensive guide to this asset class. Part six of six.
ETFs: All you need to know 5
20/12/2010  Morningstar's Tim Murphy delivers a comprehensive guide to this asset class. Part five of six.
ETFs: All you need to know 4
20/12/2010  Morningstar's Tim Murphy delivers a comprehensive guide to this asset class. Part four of six.
ETFs: All you need to know 3
20/12/2010  Morningstar's Tim Murphy delivers a comprehensive guide to this asset class. Part three of six.
ETFs: All you need to know 2
20/12/2010  Morningstar's Tim Murphy delivers a comprehensive guide to this asset class. Part two of six.
ETFs: All you need to know 1
20/12/2010  Morningstar's Tim Murphy delivers a comprehensive guide to this asset class. Part one of six.
The growing ETF market
05/04/2011  State Street Global Advisors' senior managing director Jim Ross discusses how investors around the world are using ETFs.
ETF market overview
22/09/2011  Morningstar's Tim Murphy looks at the latest trends in the sector and the importance of understanding the different market indexes.
ETF monthly wrap-up
02/02/2012  The latest Morningstar ETF monthly report looks at what investors can expect from the ETF landscape this year.
The case for equity income
30/11/2011  With rates falling on term deposits, income from equities investments can be a solution.
ETF monthly wrap-up
28/11/2011  The latest Morningstar ETF monthly report looks at how the market has change over the year.
ETF Monthly wrap-up
11/11/2011  The latest Morningstar ETF monthly report looks at cost and liquidity issues for the industry.
ETF Monthly wrap-up
16/09/2011  The latest Morningstar ETF monthly report looks at the structure behind the industry and the key players.
Using ETFs effectively
24/08/2011  ETFs still have a role in investment portfolios despite the recent decline in sharemarkets.
ETF monthly wrap-up
28/07/2011  The latest Morningstar ETF monthly report highlights the growth of exchange-traded commodities.
Outlook for Australian shares
22/06/2011  Investors can still access opportunities in the challenging Australian sharemarket through low-cost strategies.
ETF trends in Australia
10/06/2011  State Street Global Advisors managing director Frank Henze gives us his views on what types of ETF products investors can expect.
Essential guide to ETFs 6
07/06/2011  In the sixth and final part of this video series, Vanguard's Edward Caser looks at the practical application of ETFs in your portfolio.
Essential Guide to ETFs 4
24/05/2011  In the fourth of this six-part video series, State Street's Graeme Smith outlines the mechanics behind their ETFs.
Essential Guide to ETFs 5
01/06/2011  In the fifth part of this six-part video series, BetaShares' Drew Corbett looks at how to evaluate different types of ETFs when considering them for investment.
Essential guide to ETFs 3
17/05/2011  In the third part of our five-part ETF video series, Russell Investments' Peter Burnett outlines why you should look at this increasingly popular product.
Essential guide to ETFs 2
09/05/2011  In the second part of our five-part ETF video series, Morningstar's Zac Wallis gives an insight into researching your ETF investments.
The investment case for gold
06/05/2011  Investors can access the benefits of gold through ETCs
Essential Guide to ETFs
02/05/2011  In the first part of our five-part ETF video series, the ASX's Jonathan Morgan lays out the fundamentals.
Gold and silver as an asset class
12/04/2011  Morningstar US' Abraham Bailin and State Street's Anthony Rochte discuss shifts in thinking on gold, silver, and their application in a portfolio.
Dividends: designer vs cheap yields
07/04/2011  A high dividend yield does not always mean a healthy company.
What happens to ETFs in times of crisis?
15/03/2011  What should investors keep in mind about country-specific ETFs when turmoil or disaster strike?
Find out more about ETFs
14/03/2011  Morningstar and ASX have teamed up to deliver a number of seminars about ETFs and their role in a portfolio.
The ins and outs of counterparty risk
10/03/2011  What is counterparty risk and how it can affect your investment?
An inside look at a high dividend ETF
03/03/2011  What type of stocks are producing strong dividend earnings to investors?
Navigating the ETF product landscape
02/02/2011  What can investors expect from new ETF products.
What could pop the gold bubble?
--  Morningstar US' Scott Burns discusses the state of precious metal ETFs and what could bring the price of gold down.
The inside line on indices
25/11/2010  Exploring the construction of market indices with MSCI Executive Director, Michael Anderson.
Burns: Your ETF won't fail
17/11/2010  Morningstar US takes a critical eye to recent reports on the dangers of ETFs.
Navigating through ETF products
13/10/2010  What do the range of ETF products mean for investors?
Morningstar launches ETF research
13/09/2010  Research universe in Australasia expands to include this popular investment vehicle.
ETFs: Taking ownership
--  An ETF is bought on the ASX like any listed investment but is it that simple?
ETFs: Effectively using ETFs in your portfolio
--  We know what they are and how to buy them, but how do we incorporate them in a portfolio?
ETFs: What's under the bonnet
--  What makes up an ETF, how it's put together and how you can own one.
How to avoid ETF bloopers
--  Do you really know what lies beneath your ETF? Find out how to avoid the pitfalls.
ETFs for easy diversification: pioneer
--  ETF pioneer Jim Ross of State Street Global Advisers explains why these products are gaining popularity.
ETFs ready for takeoff
--  They're cheap, they're transparent, but are ETFs getting the inflows they deserve?
Could ETFs benefit your super?
--  What you need to know about Exchange Traded Funds and retirement savings
ETF basics
--  Exchange Traded Funds are becoming more fashionable, but what do newcomers need to know?
What you need to know about ETFs
--  Morningstar's Tim Murphy discusses what investors need to know about Exchange Traded Funds