Investing in property and infrastructure ETFs

Opportunity for income, capital growth and diversification

VanEck offers three ETFs which invest in property and infrastructure.

International Property

VanEck Vectors FTSE International Property (Hedged) ETF

REIT

Global Infrastructure

VanEck Vectors FTSE Global Infrastructure (Hedged) ETF

IFRA

Australian Property

VanEck Vectors Australian
Property ETF

MVA

Property and Infrastructure

International Property

Australians have a love affair with property. A glance at the AFR Rich List highlights that property has enabled vast fortunes to be made by developers and investors. Many of them have built their empires primarily on development but also on diversifying in real estate beyond Australian shores.

Listed real estate investment trusts (REITs) enable investors to buy into property, without having to invest the huge sums that are involved in buying property directly. REITs primarily hold assets rather than develop them however development does form part of the income. But the opportunities to invest in international REITs in Australia are limited. Australian REITs account for just 3% of the world’s REIT opportunity. The US, Europe and Asia offer investment opportunities not readily available in Australia, including student housing developments and storage including data warehouses.

Source: Bloomberg, FTSE EPRA/NAREIT Developed Rental Index.
Data as of 28 February 2019.


 


 

REIT gives investors low cost access to a diversified portfolio of international REITs in a single trade on ASX.

The US, Europe and Asia offer investment opportunities not readily available in Australia, including hotels and resorts, healthcare, self storage and data warehouses.

Source: Bloomberg, FTSE EPRA/NAREIT Developed Rental Index. Data as of 28 February 2019.

 

Global Infrastructure

There are limited opportunities on the ASX to invest in infrastructure assets. Australian investors should look to diversify globally on assets, geographies and management teams.

The case for global infrastructure:

  1. Infrastructure assets form the backbone of society - they are the basic and irreplaceable public services essential to an economy such as roads, rail, airports, water, power, schools, hospitals and pipelines.
  2. Stable income - infrastructure assets are enduring and have steady cash flows often linked to inflation and mandated by government regulation offering reliable income.
  3. Defensive characteristics - infrastructure assets exhibit low volatility and low correlation compared to traditional asset classes.  Infrastructure assets are large and have little or no competition, protected by high barriers to entry. This results in monopolies with inelastic demand ensuring comfortable margins.
  4. Global trends - trends such as population growth, urbanisation and increasing trade are supportive of infrastructure. More recently long running fiscal deficits are also creating the need for governments to spend on new assets and privatise existing public services.

VanEck's Damon Gosen discusses investing in infrastructure securities


 

IFRA gives investors low cost access to a diversified portfolio of global infrastructure securities in a single trade on ASX.

Subsector Breakdown

Source: FTSE Developed Core Infrastructure 50/50 Index. Hedged AUD 28 February 2019.

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Australian Property

Australians love property and A-REITs give Australian investors an opportunity to invest in retail, industrial and offices trusts listed on ASX. However, the A-REIT market is a narrow one which makes it difficult for stock pickers to find opportunities to outperform. As a result, VanEck Vectors Australian Property ETF (MVA), has an edge over most actively managed funds:

  • lower cost
  • more diversified

MVA reduces exposure to the retail sector that dominates Australian REIT portfolios so is more diversified than the market benchmark from a sector perspective.

Investors wishing to pay lower fees and achieve a diversified A-REIT exposure for income and capital growth, which can demonstrate outperformance should consider MVA.

The Australian research community has reinforced their conviction
in MVA’s strategy with favourable ratings including:

  • Lonsec - Recommended Index
  • Zenith - Recommended

Find out more about IFRA, REIT and MVA

 

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The Lonsec Rating (assigned September 2017) presented in this document is published by Lonsec Research Pty Ltd ABN 11 151 658 561 AFSL 421 445. The Rating is limited to “General Advice” (as defined in the Corporations Act 2001 (Cth)) and based solely on consideration of the investment merits of the financial product(s). Past performance information is for illustrative purposes only and is not indicative of future performance. It is not a recommendation to purchase, sell or hold VanEck product(s), and you should seek independent financial advice before investing in this product(s). The Rating is subject to change without notice and Lonsec assumes no obligation to update the relevant document(s) following publication. Lonsec receives a fee from the Fund Manager for researching the product(s) using comprehensive and objective criteria. For further information regarding Lonsec’s Ratings methodology, please refer to our website at www.lonsecresearch.com.au.

The Zenith Investment Partners (ABN 27 103 132 672, AFS Licence 226872) (“Zenith”) rating (assigned October 2018) referred to in this document is limited to “General Advice” (s766B Corporations Act 2001) for Wholesale clients only. This advice has been prepared without taking into account the objectives, financial situation or needs of any individual and is subject to change at any time without prior notice. It is not a specific recommendation to purchase, sell or hold the relevant product(s). Investors should seek independent financial advice before making an investment decision and should consider the appropriateness of this advice in light of their own objectives, financial situation and needs. Investors should obtain a copy of, and consider the PDS or offer document before making any decision and refer to the full Zenith Product Assessment available on the Zenith website. Past performance is not an indication of future performance. Zenith usually charges the product issuer, fund manager or related party to conduct Product Assessments. Full details regarding Zenith’s methodology, ratings definitions and regulatory compliance are available on our Product Assessments and at www.zenithpartners.com.au.

IMPORTANT NOTICE: Issued by VanEck Investments Limited ABN 22 146 596 116 AFSL 416755 (‘VanEck’). VanEck is the responsible entity and issuer of VanEck Vectors FTSE International Property (Hedged) ETF ARSN 631 508 248, VanEck Vectors FTSE Global Infrastructure (Hedged) ETF ARSN 611 639 058 and VanEck Vectors Australian Property ETF ARSN 165 151 771.This information is general advice only about financial products and not personal financial advice. It does not take into account any person’s individual objectives, financial situation or needs. Before making an investment decision investors should read the product disclosure statement and with the assistance of a financial adviser consider if it is appropriate for their circumstances. A copy of the PDS is available from www.vaneck.com.au or by calling 1300 68 38 37. No member of VanEck group of companies gives any guarantee or assurance as to the repayment of capital, the payment of income, the performance, or any particular rate of return of any VanEck funds. Past performance is not a reliable indicator of future performance.