Benefits of investing in the VanEck Vectors MSCI World Ex Australia Quality ETF

Reference Index strategy

Each Fund provides investors access to the performance of its Reference Index.

Exchange Traded Funds

Each Fund is an index-tracking ETF. ETFs provide investors with the best attributes of both managed funds and listed shares.

When you invest in a Fund, you gain access to a portfolio of investments, constructed using professional skills and knowledge that you may not have access to if you invest on your own.

ETFs can be easily traded on ASX like listed shares, with live pricing throughout the ASX Trading Day. The difference between a single trade in ETF Units and company shares is that when you buy ETF Units you acquire exposure to the performance of an entire portfolio of securities not just a single company, saving you money and time.

ETFs also provide potential advantages to investors including low costs and full daily transparency of the underlying portfolio holdings.

Access to international equities via ASX

Investing in international equities via an Australian ETF simplifies your administration and reporting and eliminates foreign paperwork.

Investors also benefit from the other advantages of ASX traded ETFs, including the ability to transact during Australian market hours and settle payments in Australian dollars.

Lower costs

Since ETFs track an index, they are typically able to achieve lower operating costs. As a result they charge management fees which are generally lower than those of equivalent unlisted actively managed funds.

Diversification with a single trade

The Funds provide you with a simple way to access a diversified portfolio of listed equities via a single trade on ASX.

Liquidity

You can buy and sell ETF Units on ASX. Liquidity in each Fund is facilitated by a Market Maker. The Market Maker's role is to match buy and sell orders for ETF Units from ASX Investors.

Flexibility of trading on exchange

As the ETF Units are quoted on ASX, you have the flexibility to trade ETF Units in a Fund throughout the day, like trading shares. You can even buy and sell on the same day (intraday trading).

Transparency

ETFs provide investors with transparency in respect of portfolio holdings. The portfolio of securities in each Fund is published daily at www.vaneck.com.au.

Currency hedging

We engage in currency hedging in IFRA with the aim of reducing the impact on the value of IFRA's ETF Units from fluctuations in the value of the Australian dollar relative to other foreign currencies in which the securities held in the Fund's portfolio are denominated.

The hedging strategy is expected to be highly effective but cannot entirely eliminate currency risk.

Tax advantages

In contrast to an unlisted actively managed fund, the turnover of the underlying portfolio in the Funds, each of which is an index-tracking fund, is generally low, reducing the level of capital gains and associated capital gains tax payable by you.

Withholding tax on any dividends from underlying securities arises at the Fund level and not the investor level. This means you do not have to complete foreign forms in order to get the benefit of reduced withholding tax rates. VanEck arranges for the completion of all necessary paperwork for the Fund.

Dividends may be paid to Authorised Participants when they redeem, which reduces the tax burden on the remaining Unitholders. Unlisted managed funds typically do not do this.

About the Fund

VanEck Vectors MSCI World ex Australia Quality ETF (QUAL) invests in a diversified portfolio of quality international companies listed on exchanges in developed markets around the world (ex Australia).  The ETF seeks to track the performance of the MSCI World ex Australia Quality Index (M4CXMVIA) with net dividends reinvested, in Australian dollars, before taking into account fees, expenses and tax.

Index description

The MSCI World ex Australia Quality Index (M4CXMVIA)aims to capture the performance of quality stocks selected from the Parent Index, MSCI World ex Australia, by identifying companies with high quality scores based on three key fundamental factors: high return on equity; stable year-on-year earnings growth; and low financial leverage.

Key points

1. Seeks to identify quality stocks by screening based on MSCI quality scores for high return on equity, stable annual earnings growth, and low financial leverage    
2. Potential for greater diversification while seeking to reduce volatility in international portfolios     
3. Based on an MSCI index, a leader in international equity indexing

How we invest your money

The VanEck Vectors MSCI World ex Australia Quality ETF seeks to track the performance of the MSCI World ex Australia Quality Index (with net dividends reinvested) in Australian dollars, before taking into account fees, expenses and tax.

The MSCI World ex Australia Quality Index ($A) (Quality Index) is based on a traditional market capitalisation-weighted index, the MSCI World ex Australia Index (Parent Index), which includes large- and mid-capitalisation stocks.

The Quality Index aims to capture the performance of the highest quality growth stocks from the Parent Index, on the basis of a quality score determined by three key factors:

• high return on equity;

• stable year-on-year earnings growth; and

• low financial leverage.

The Quality Index reweights the selected quality growth stocks from the Parent Index to emphasise stocks with the highest quality scores according to MSCI.