Update: iShares MSCI AC Far East ex-Japan UCITS ETF

Hier handelt es sich um eine recht konzentrierte China-Wette: Bis zu 60% des ETF-Vermögens werden in der Region Greater China investiert. Ein zweites Schwergewicht bilden auf Sektorebene Finanztitel. 

Caroline Gutman 12.06.2015

Rolle im Portfolio

The iShares MSCI AC Far East ex-Japan UCITS ETF provides diversified exposure to large- and mid-cap stocks within many of the developing and developed markets of Asia, outside of Japan. Many of the component countries have seen their importance on the global stage rise dramatically in recent years. The Chinese economy now ranks second in the world, behind only the United States.

The MSCI AC Far East ex-Japan Index is heavily concentrated in financials, which accounts for nearly one-third of its total weighting. Returns from the underlying index have been quite volatile, but they have been less erratic than the benchmarks tracking the individual countries that make up the biggest parts of the index.

This fund may suit income-seeking investors as it pays dividends from the underlying stocks on a quarterly basis.

Fundamentale Analyse

Although the MSCI AC Far East ex-Japan Index covers nine countries, China wields the greatest influence, accounting for almost one-third of the index’s weighting. China, which is undergoing a transition from an investment- to consumption-driven economy, is already facing related growing pains and has a significantly lower GDP growth rate target of 7.0% for 2015.

China has done well as the manufacturer of the world, but its growth has relied on consistent demand from developed markets. As the financial crisis showed, demand from the West greatly impacts China’s economy, and reduced aggregate demand has taken a long-term toll on the manufacturing industry. China’s Purchasing Manager Index (PMI), which indicates the strength of the manufacturing sector, fell from 55 in the mid-2000s to nearly 40 in 2008. After a brief rebound in 2009, it has remained around 50 since mid-2013, which is considered subpar. Factory employment has also been at a six-year low, further raising concerns.

An area of concern, however, is China’s slowing housing market, which accounts for 15% of China’s economy. Home sales slowed abruptly in 2014, after home prices reached all-time highs for five consecutive years which had stoked fears of a housing bubble. In response, the government has enacted plans to spark increased activity, including lower interest rates and unorthodox discounts on new homes.

Taiwan is also dependent on China as a trading partner. Its export-driven economy has expanded considerably in the last few decades but its recent growth has not been as robust as some of its neighbours'. Its GDP, however, is forecasted to reach nearly 3.8% in 2015, a significant improvement from its 2013 growth rate of 1.7%.

The city-states of Hong Kong and Singapore have thrived as financial hubs. In both cases, the financial sector, including real estate, dominates the equity market. That poses a significant risk, particularly as governments around the world look for new ways to regulate banks and financial markets in the aftermath of the global financial crisis.

Indexkonstruktion

The MSCI AC Far East ex-Japan Index is a free-float market capitalisation-weighted index currently consisting of about 540 stocks across nine countries: China, Indonesia, South Korea, Malaysia, the Philippines, Taiwan, Thailand, Hong Kong and Singapore. The index covers approximately 85% of the market capitalisation of these markets. New entrants must pass minimum requirements for liquidity and length of trading history. The index is reviewed quarterly, and rebalanced semi-annually with new size cut-offs calculated. The index’s top country weights are China (28-32%), South Korea (18-23%), Taiwan (15-20%), Hong Kong (12-14%), and Singapore (5-8%). At the industry level, financials and information technology are the leading sectors, with weights of 30-36% and 19-23%, respectively, followed by industrials and consumer discretionary (7-10% each). There is limited index concentration, with the top 10 positions making up about 22-24% of the total. But there is significant concentration within a handful of large conglomerates, particularly in South Korea. Securities issued under the umbrellas of Samsung, LG, and Hyundai account for more than half the total South Korean exposure. The top individual securities in the index are Samsung Electronics (4-6%), Taiwan Semiconductor (3-5%) and Tencent Holdings (2-4%).

Fondskonstruktion

The fund uses optimised sampling to try to capture the performance of the MSCI AC Far East ex-Japan Net Total Return Index, owning a physical basket of securities designed to match the risk-return characteristics of the underlying index but not necessarily the exact stocks in the exact weights. The fund uses futures for cash equitisation purposes, which helps to limit tracking error. This fund engages in securities lending. In the 12 months through March 2015, an average of 13.55% of the portfolio was out on loan, up to a maximum of 19.49%, and in total the programme added 0.08% of net return to the fund. BlackRock, iShares’ parent company and lending agent, passes 62.5% of the gross securities lending revenue to the fund and keeps the remaining 37.5% for itself, out of which amount it will pay the associated costs of the activity. BlackRock has a 50% cap on the amount of assets that its iShares funds can lend out. To protect the fund from a borrower’s default, BlackRock takes collateral greater than the loan value. Collateral levels vary from 102.5% to 112% of the value of the securities on loan, depending on the assets provided by the borrower as collateral. Additional counterparty risk mitigation measures include borrower default indemnification. Specifically, BlackRock commits to replace the securities that a borrower fails to return, but it will not cover losses incurred on the reinvestment of cash collateral.

Gebühren

The fund carries a total expense ratio (TER) of 0.74%, which is considerably pricier than some of the alternatives for Asia ex-Japan exposure. Other costs potentially carried by the unitholder but not included in the total expense ratio include transaction costs on infrequent occasions when the underlying holdings change, and bid-ask spreads and brokerage fees when buy and sell orders are placed for ETF shares. Income generated from securities lending helps to recoup some of the total costs.

Alternativen

There are several providers that offer similar ETFs, including iShares, Amundi, SPDR, HSBC and db-X trackers. To get exposure to equities in the Asia ex-Japan region, there are a few choices that reference different underlying indices and have varying country exposures. They include Amundi ETF MSCI Pacific ex-Japan, UBS-ETF MSCI Pacific (ex-Japan), iShares Core MSCi Pacific ex Japan, Vanguard FTSE Developed Asia Pacific ex-Japan and HSBC MSCI Pacific ex-Japan. All four funds have significant exposure to Australia. iShares MSCI EM Asia UCITS ETF includes exposure to India (7-9%) in lieu of Singapore and Hong Kong. Out of all of these funds, the iShares Core MSCI Pacific ex Japan fund and the Vanguard FTSE Developed Asia Pacific ex-Japan fund have the lowest fees, with TERs of 0.20% and 0.22%, respectively.

 

Über den Autor

Caroline Gutman  ist Fondsanalystin bei Morningstar.