SelfWealth SMSF Leaders ETF: Q1 2020 Rebalance

SelfWealth SMSF Leaders ETF: Q1 2020 Rebalance

Launched in November, 2019, the SelfWealth SMSF Leaders Fund (ASX: SELF) is an index-based exchange-traded fund (ETF) that aims to outperform the market benchmark using an innovative construction method based on peer investing.

The ETF is a concentrated Australian equities portfolio consisting of 25 to 75 ASX 200 stocks, rebalanced quarterly. These shares are selected from the highest-performing SMSF portfolios across a pool of thousands of portfolios.

The first quarterly rebalance of the ‘SELF’ ETF occurred on January 15, 2020.

Before making any investment decision, please consult the Product Disclosure Statement (PDS).

 

Why is the ETF rebalanced quarterly?

‘SELF’ is governed by a predetermined rules-based set of methodology and objective criteria, thus it is not an actively managed fund. As a result, this means the index-based ETF is rebalanced quarterly to ensure that stock constituents remain aligned with investment objectives.

The composition of the ‘SELF’ index adjusts with each quarterly rebalance to reflect real-world performance recorded among the pool of SMSF portfolios used to construct the fund. New equities may be added to the ETF and existing equities may be removed. This is based on the SMSF performance database of the prior quarter, as measured on the last business day of that period.

The ‘rebalance date’ is the close of the third Wednesday in January, April, July and October where that day is also a business day, otherwise it shall be the following business day.

As a concentrated Australian equities portfolio made up of 25 to 75 different stocks, the total number of equities within the ETF will typically fluctuate from quarter to quarter. At quarterly rebalance dates, index constituents will be equally weighted, irrespective of any weight they may have held if previously included within the index.

 

What has changed as part of the Q1 2020 index rebalance?

As part of the Q1 2020 index rebalance, the number of Australian equities within the ETF portfolio has increased from 51 last quarter to 56 this quarter. As a concentrated index-based ETF targeting between 25 to 75 stocks, the number of constituents following the rebalance sits in the middle of this range, with each stock represented by an even weight of 1.7857% of the entire fund.

The below table illustrates the changes made to the SelfWealth SMSF Leaders Fund Index following the Q1 2020 rebalance. This includes the stocks that have been removed from or added to the ‘SELF’ ETF.

 

Equities removed Equities added
Code Company Code Company
ALU Altium Limited CGF Challenger Limited
APT Afterpay Limited CPU Computershare Limited
BPT Beach Energy Limited CSR CSR Limited
JBH JB Hi-Fi Limited CTX Caltex Australia Limited
LYC Lynas Corporation Limited IFL IOOF Holdings Limited
QAN Qantas Airways Limited ORA Orora Limited
OSH Oil Search Limited
PDL Pendal Group Limited
PPT Perpetual Limited
QUB Qube Holdings Limited
SEK SEEK Limited

Equity changes effective January 15, 2020, the quarterly rebalance date

 

The above changes have also had a modest impact on sector representation by weight, as detailed in the below table and chart. Following the removal of JB Hi-Fi (ASX: JBH), there is now one less consumer discretionary stock within the ‘SELF’ index.

In light of the removal of Altium (ASX: ALU) and Afterpay (ASX: APT), and the addition of Computershare (ASX: CPU), there is a net change resulting in one fewer stock from the information technology sector. The rules-based nature of the index meant that declining share prices across the final quarter of last year from Altium, down 5.6%, and Afterpay, down 5.5%, weighed on their representation among the highest-performing SMSF portfolios and ultimately triggered their removal from the ETF.

Other changes to the ‘SELF’ index include a minor increase in the number of stocks from the energy, industrial and materials sectors. However, the largest change is among stocks from the financials sector, where the likes of Challenger (ASX: CGF), IOOF Holdings (ASX: IFL), Pendal Group (ASX: PDL) and Perpetual (ASX: PPT) have increased the representation of this sector by 5.6% to a total of 33.9%.

Each of the above-mentioned stocks operate in the investment management space and have largely edged into the ETF by way of their strong performances in Q4 2019, where their share prices increased 20.6% (CGF), 55% (IFL), 29.2% (PDL) and 15.7% (PPT).

For the full list of index constituents, please refer to the portfolio holdings.

 

Sector Q4 2019 Q1 2020
Number of Stocks Sector Weight Number of Stocks Sector Weight
Communication Services 1 1.9% 1 1.8%
Consumer Discretionary 5 9.9% 4 7.1%
Consumer Staples 4 7.4% 4 7.1%
Energy 4 8.4% 5 8.9%
Financials 15 28.3% 19 33.9%
Health Care 5 10.2% 5 8.9%
Industrials 2 3.9% 3 5.4%
Information Technology 2 3.6% 1 1.8%
Materials 12 24.2% 13 23.2%
Utilities 1 2.0% 1 1.8%

Index Weight by Sector effective January 15, 2020, the quarterly rebalance date – rounded to 1 decimal

 

Index Weight by Sector effective January 15, 2020, the quarterly rebalance date

 

How do I follow the NAV and performance of the SelfWealth SMSF Leaders ETF?

For information on the Net Asset Value (NAV) and performance of the index-based ‘SELF’ ETF, please visit etf.selfwealth.com.au. This page is updated daily with the most recently available information.

You may also refer to the ETF Fact Sheet, which includes backtested fund benchmark performance since inception versus the market benchmark. Backtested or past performance is not indicative of future results.

 

Is the ‘SELF’ ETF free to buy?

As an exclusive offer for all SelfWealth members, there are no transaction fees to buy units in the SelfWealth SMSF Leaders ETF if you use your SelfWealth trading account to invest in the ETF. You will pay no brokerage fees on a ‘buy’, regardless of the size of your order.

Buying units in the ETF is the same as any other trading order you place, you just need to search for the fund using the ASX ticker code ‘SELF’. Normal brokerage fees will apply if you choose to place a sell order for any units you hold in the SelfWealth SMSF Leaders ETF.

For more information, please visit etf.selfwealth.com.au. Alternatively, for any investment questions, please contact sales@selfwealth.com.au.

 

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Disclaimer for the SelfWealth SMSF Leaders ETF

Important Information

The SelfWealth SMSF Leaders ETF (the Fund) is issued by ETFS Management (AUS) Limited, the Responsible Entity of the Fund. (AFSL No 466778). SelfWealth Limited (AFSL No 421789) is the appointed distributor of the Fund. Except for their respective roles with respect to the Fund, ETFS Management (AUS) Limited and SelfWealth Limited are unrelated companies. The PDS for the SelfWealth SMSF Leaders ETF contains all of the details of the offer. Before making any decision to make or hold any investment in the Fund you should consider the PDS in full.

The information provided does not take into account your investment objectives, financial situation or particular needs. You should consider your own investment objectives, financial situation and particular needs before acting upon any information provided and consider seeking advice from a financial advisor if necessary. You should not base an investment decision simply on past performance. Past performance is not an indicator of future performance. Returns are not guaranteed and so the value of an investment may rise or fall.

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