Key takeaways:

• Net assets in the Vanguard Australian Property Securities Index ETF are nearly four times that of the VanEck Australian Property ETF, and around five times the SPDR S&P/ASX 200 Listed Property Fund

• VAP, MVA, and SLF feature a near-identical list of core holdings, but VAP has a more affordable management fee and has outperformed since inception and across the last three years, while MVA leads on a five-year timeline

A month ago we took a look at the two most popular ASX-listed ETFs tapping into the artificial intelligence (AI) and robotics theme, being the BetaShares Global Robotics and Artificial Intelligence ETF (ASX: RBTZ) and the Global X ROBO Global Robotics & Automation ETF (ASX: ROBO).

This time around, we’re focusing on ASX-listed ETFs offering exposure to the Australian property market. Given the fixation Australians have afforded to real estate over the years, the RBA’s tightening cycle has only drawn further attention to the gyrations of the market. 

While much of the ASX REIT sector is devoted to commercial or industrial real estate, the sector still garners significant interest. We’re putting three ETFs under the microscope in the Vanguard Australian Property Securities Index ETF (ASX: VAP), the VanEck Australian Property ETF (ASX: MVA), and the SPDR S&P/ASX 200 Listed Property Fund (ASX: SLF).

Fund Objective

The Vanguard Australian Property Securities Index ETF seeks to track the return of the ‘S&P/ASX 300 A-REIT Index’ before taking into account fees, expenses, and tax. It is intended to provide investors with exposure to ASX-listed Real Estate Investment Trusts (A-REITs) across the retail, office, industrial, and diversified property sectors.

In the case of VanEck’s Australian Property ETF, MVA gives investors exposure to a diversified portfolio of ASX-listed securities with the aim of providing investment returns before fees and other costs that closely track the returns of the ‘MVIS Australia A-REITs Index’. This is a pure-play rules-based sector index tracking the performance of the local property sector, including the largest and most liquid A-REITs spanning commercial, retail, office, specialised, and industrial property.

Our third fund under the microscope, the SPDR S&P/ASX 200 Listed Property Fund, seeks to closely track, before fees and expenses, the returns of the ‘S&P/ASX 200 A-REIT Index’. This index, which is a sector subindex of the S&P/ASX 200, tracks the performance of an industry-diverse basket of A-REITs and mortgage REITs.

Fund Profiles and Holdings

First admitted to the ASX in October 2010, VAP has since grown into the most popular Australian property ETF, with funds under management (FUM) at $2.3 billion.

VanEck followed Vanguard into the market with its own Australian Property ETF three years later. Since then, its net assets have risen to $610.1 million.

SPDR’s S&P/ASX 200 Listed Property Fund is the oldest property ETF on the ASX, first making its way to the local share market back in 2002. Nonetheless, its popularity has wavered over time, such that its FUM is $472.2 million at the time of writing.

Based on the ASX’s Investment Products update for June, VAP recorded a $6.7 million improvement in FUM thanks to $12.4 million in funds inflow across the course of the month. Nearly 14,000 trades were made involving VAP across all broker participants.

On the other hand, MVA saw its FUM shrink by $15.9 million last month on the back of $11.7 million in funds outflow. SLF fared even worse, with its net assets declining by $30.6 million, albeit the fund saw a smaller net outflow of $6.8 million for the month. Across all broker participants monthly trades involving the duo totalled nearly 5,000, which underscores VAP’s dominance.

All three funds feature a near-identical list of ASX names within their top 10 holdings. In fact, MVA and SLF share the same core holdings, which account for 81.8% and 83.5% of their respective fund holdings by weight. The top 10 within Vanguard’s VAP ETF represent 80.9% of the weight of the fund, including one different holding compared with its peers.

Since VAP tracks a broader index, it is slightly more diversified, featuring 31 holdings, as opposed to 18 in the VanEck Australian Property ETF, and 24 that make up the SPDR S&P/ASX 200 Listed

VAP^

• Goodman Group: 27.6%

• Scentre Group: 11.1%

• Stockland: 7.7%

• Mirvac Group: 7.2%

• Dexus: 6.7%

• GPT Group: 6.4%

• Vicinity: 5.7%

• Charter Hall Group: 4.1%

• National Storage REIT: 2.3%

• Charter Hall Long Wale REIT: 2.1%

• MVA*

  • Goodman Group: 10.5%

  • Scentre Group: 10.3%

  • Mirvac Group: 10.0%

  • Stockland: 9.8%

  • Dexus: 9.8%

  • GPT Group: 8.5%

  • Vicinity: 8.3%

  • Charter Hall Group: 5.6%

  • National Storage REIT: 4.9%

  • Region Re: 4.3%

• SLF*

  • Goodman Group: 28.4%

  • Scentre Group: 11.5%

  • Stockland: 8.0%

  • Mirvac Group: 7.4%

  • Dexus: 7.0%

  • GPT Group: 6.6%

  • Vicinity: 6.1%

  • Charter Hall Group: 4.3%

  • National Storage REIT: 2.2%

  • Region Re: 2.2%

Note: as at June 30, 2023

Performance and Distributions

Since inception, the Vanguard Australian Property Securities Index ETF has achieved a gross return of 9.09% per annum. After taking into account fees and other expenses, the fund has yielded a return of 8.82% per annum over the same timeframe. By way of comparison, the fund’s benchmark target has achieved 9% per annum.

On a five-year timeline, VAP’s total return is 3.71% p.a, but performance increased dramatically across the last three years, with total returns being 8.27% p.a.

In comparison with VAP, the performance of the VanEck Australian Property ETF offers a series of mixed results. Since inception, MVA has returned 8.36% p.a. Up to the end of June 2023, the fund’s total returns on a five-year and three-year basis were 4.41% p.a. and 7.74% p.a.

The SPDR S&P/ASX 200 Listed Property Fund has trailed both of its peers since inception, albeit the fund has operated across a longer period of time, thus representing a challenge to maintain higher returns. Nonetheless, the fund has returned 5.51% per annum since 2002. 

More recently, SLF’s total return was 3.2% p.a. in the five-year period ending June 30, 2023, and 7.76% p.a. across the last three years. 

While VAP and SLF have consistently paid quarterly distributions over recent years, VanEck’s fund has differed in that it has paid two distributions each year. Naturally, the amount and timing of distributions will vary from period to period, and there may even be periods where no distributions are made. 

Prospective investors should also remember that past performance is not indicative of future performance, and results do not provide any guarantee that future returns will be of the same magnitude, or that returns will be positive.

Fees

Between the three funds, Vanguard’s Australian Property Securities Index ETF offers the lowest management fee. The annual fee charged by Vanguard for managing this investment is 0.23% per annum, which is calculated as a percentage of money invested in the fund. Vanguard advises that indirect costs, expense recoveries, transaction costs, and buy/sell spreads for VAP are estimated at 0.00% p.a. of the NAV of the fund.

The VanEck Australian Property ETF charges a management fee of 0.35% per annum. That is slightly ahead of the 0.4% management cost charged by State Street Global Advisors for the SPDR S&P/ASX 200 Listed Property Fund. Based on the most recent information available, both funds indicate that estimates for other expenses are 0.00% per annum.

Please refer to the relevant Product Disclosure Statements for up-to-date details on costs and expenses, which may be deducted from the funds assets as and when they are incurred. 

Summary

As the dominant ETF focusing on Australian property, the Vanguard Australian Property Securities Index ETF has net assets that are double the combined total of its peers in the VanEck Australian Property ETF and the SPDR S&P/ASX 200 Listed Property Fund. The trio feature a  near-indistinguishable list of core holdings, and while VAP offers exposure to a larger number of securities, each fund’s top 10 holdings account for a significant (>80%) weight of net assets.

Vanguard’s market-leading product charges investors the lowest management fee at 0.23% per annum, and it has also achieved the highest returns since inception and over the last three years. On the other hand, VanEck’s MVA ETF boasts the highest five-year performance record among the trio, and it differs from its peers in that it pays a biannual distribution, as opposed to quarterly payments.

VAP

• Tracking: S&P/ASX 300 A-REIT Index

• Net Assets: $2.3 billion

• Top 10 Holdings (weight): 80.9%

• 5-Year Performance (p.a.): 3.71%

• Distributions: Quarterly

• Management Fees (p.a.): 0.23%

• MVA

  • Tracking: MVIS Australia A-REITs Index

  • Net Assets: $610.1 million

  • Top 10 Holdings (weight): 81.8%

  • 5-Year Performance (p.a.): 4.41%

  • Distributions: Biannual

  • Management Fees (p.a.): 0.35%

• SLF

  • Tracking: S&P/ASX 200 A-REIT Index

  • Net Assets: $472.2 million

  • Top 10 Holdings (weight): 83.5%

  • 5-Year Performance (p.a.): 3.20%

  • Distributions: Quarterly

  • Management Fees (p.a.): 0.40%