The VanEck Vectors Australian Property ETF (ASX: MVA) is one of the lowest-cost property ETFs on the ASX.
How ASX ETFs Work
The VanEck Vectors Property ETF
VanEck’s MVA ETF has 12 holdings as well as a small cash allocation and aims to track the performance of the MVIS Australia A-REITs Index. All of the 12 holdings are ASX-listed real estate investment trusts, otherwise known as REITs.
These REITs included are the largest on the ASX, including Goodman (ASX: GMG), Stockland (ASX: SGP) and Charter Hall (ASX: CHC).
Over the past year the MVA ETF has benefited greatly from two RBA rate cuts, returning 26.79% including dividends. Over a five-year period, the ETF has returned 14.64% per year.
Dividends are paid semi-annually, typically in July and January, and the ETF currently offers a trailing dividend yield of 3.93%, 7% franked.
MVA Fees & Risks
The MVA ETF is one of the lowest-cost ASX property ETFs, with a management fee of 0.35% per year. This compares to 0.23% for the Vanguard Property Securities ETF (ASX: VAP).
While MVA might benefit from interest rate cuts, it would also be heavily impacted by an interest rate increase, so interest rate risk is a concern. MVA is also a very concentrated ETF, with only 12 holdings all in the same sector. This means I would consider this ETF a tactical ETF, rather than something that would be used as the core of a portfolio.
My Take On MVA
Vaneck’s MVA ETF is an interesting ETF and one that has the potential to show high returns over the coming months and years if interest rates are cut. However, while data shows house prices may be on the rise again, some commentators are warning that a crash is still coming. Either way, I would only be allocating a small portion of a portfolio to this tactical ETF.
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Disclosure: At the time of writing, Max does not have a financial interest in any of the companies mentioned.
