Key Highlights

  • VAE tracks the FTSE Asia Pacific ex Japan, Australia and New Zealand index and holds a substantially diversified portfolio of 1,790 companies, the largest holding count among comparable Asian Equity ETFs.
  • The fund reported net Assets of $769.22 million and a management fee of 0.40 percent per annum, having traded on ASX since 11 December 2015.
  • The top ten holdings account for only 37.51 percent of total assets, reflecting a considerably lower concentration profile than actively managed peers within the same category.

The Vanguard FTSE Asia Ex Japan Shares Index ETF (ASX:VAE) aims to track the performance of its benchmark index by holding or gaining exposure to most of the underlying constituents, with individual security weightings permitted to vary marginally from the index over time. The fund may also hold securities that have been removed from, or are expected to be included in, the index. Admitted to ASX trading on 11 December 2015, VAE is categorised under Equity Asia Pacific without Japan and benchmarked against the FTSE Asia Pacific ex Japan, Australia and New Zealand NR AUD index.

The fund reported net assets of $769.22 million and 7,085,008 units on issue, with a management fee of 0.40 percent per annum. Risk metrics show a Beta of 0.94 and a Standard Deviation of 20.02, both figures that sit closer to category averages than some of the more concentrated active funds within the broader Asian equity peer set.

Sector and Geographic Diversification

VAE's sector allocation broadly mirrors its category, with Technology at 43.89 percent close to the 45.05 percent category average, and Financial Services at 17.59 percent modestly above the 14.22 percent category figure. Consumer Cyclical exposure of 9.02 percent sits below the category average of 14.00 percent, while Healthcare at 3.37 percent and Energy at 2.48 percent both exceed their respective category averages of 1.91 percent and 0.53 percent.

Geographically, Taiwan represents the largest exposure at 27.76 percent, followed by South Korea at 21.31 percent and China at 24.55 percent, the latter below the category average of 32.05 percent. India accounts for 14.44 percent of the portfolio, above the category's 6.10 percent, while smaller allocations extend across Hong Kong, Singapore, Thailand, Malaysia, Indonesia and the United States. The fund held 99.69 percent in equities and 0.29 percent in cash.

Holdings, Returns and Distributions

Reflecting its broad, index-based structure, VAE's top ten holdings account for only 37.51 percent of total assets across a fund holding 1,790 companies, a considerably more diversified profile than the more concentrated active or thematic funds within the category. Taiwan Semiconductor Manufacturing is the largest position at 14.78 percent, followed by Samsung Electronics at 7.04 percent and SK hynix at 5.44 percent. Tencent Holdings, Alibaba Group, MediaTek, DBS Group Holdings, Delta Electronics, a Samsung Electronics preferred listing and China Construction Bank complete the remaining top ten names.

Key Takeaways

VAE offers investors a broadly diversified, lower-cost route into Asia ex Japan equities through an index-tracking structure spanning 1,790 companies, a scale of Diversification distinct from the more concentrated active and thematic funds within the same category.