Investing
| Sector | Investing |
| Sub-sector | Equities |
| Location | Australia |
Assets under management (AuM) for Exchange Traded Funds (ETFs), which are open-ended investment funds that can be traded on a stock exchange like shares, has reached a compound annual growth rate (CAGR) of 18.9 per cent globally over the past five years and is predicted to reach $US19.2 trillion by June 2028.1
The driving force behind the growth of ETFs stems from growing investor demand for portfolio diversification with assets that have low barriers to entry, operational efficiency, minimal paperwork and a high degree of transparency.
Passive (or ‘Index’) ETFs typically aim to replicate the performance of a specific index, benchmark, sector or commodity, while active ETFs have a strategically selected underlying portfolio that is actively managed by a professional fund manager, with the aim of achieving its investment objectives.
Though currently a small part of the ETF market,1 active ETFs are experiencing considerable growth and assets under management could see a four-fold increase by 2030.2
Designed to provide investors with exposure to an active equity strategy with potential for above index returns, and a fee structure aligned to performance, the systematic core active ETFs have been introduced with cost efficiency in mind and use a rigorous combination of data science and human intelligence.
The systematic advantage means that these active ETFs are designed to avoid dominance of any single investment style, such as value or growth, ensuring a fine-tuned and diversified portfolio. Through this quantitative and repeatable approach, the methodology generates unique investment insights from analysing large amounts of information, from traditional fundamental characteristics, such as price to earnings and return on equity, to alternative data sources, as well as using cutting edge statistical and machine learning techniques. This process is applied to 300 ASX stocks and around 1,400 global equities, aiming for prime stock selection and portfolio optimisation.
The aim is to provide a stable, more risk aware and balanced fund portfolio with significantly reduced impact from human bias.
Outcome
Embedded with a naturally adaptive mechanism – allowing adjustment to opportunities and risks as they emerge – the new active ETFs present a long-term solution for core allocations. The combination of MSI’s model seeking consistent active performance and a client-centric fee structure also allows Macquarie Asset Management’s active ETFs to effectively address the changing needs of investors.
As the ETF platform continues to evolve, the focus will remain on developing innovative client-driven solutions that can further improve access to Macquarie Asset Management’s investment capabilities.
We are committed to improving client solutions and products through innovation and our actively managed ETFs address the rising demand for institutional-quality portfolio building blocks with an appealing fee structure. They can work well as long term core portfolio allocations, as they aim to deliver consistent excess returns because we don’t just follow an index, we start with it, and add a systematic process that seeks to enhance returns over index performance.”
Blair Hannon
ETF Investment Strategist
Macquarie Asset Management
All investments carry risk. Different investments carry different levels of risk, depending on the investment strategy and the underlying investments. Generally, the higher the potential return of an investment, the greater the risk (including the potential for loss and unit price variability over the short term). The risks of investing in the Funds include:
Investment risk: The Fund has exposure to share markets. The risk of an investment in the Fund is higher than an investment in a typical bank account or fixed income investment. Amounts distributed to unitholders may fluctuate, as may the Fund’s unit price, by material amounts over short periods.
Market risk: The investments that the Fund has exposure to are likely to have a broad correlation with share markets in general. Share markets can be volatile and have the potential to fall by large amounts over short periods of time. Poor performance or losses in domestic and/or global share markets are likely to negatively impact the overall performance of the Fund.
Security specific risk: Securities and the companies that issue them are exposed to a range of factors that affect their individual performance. These factors may cause an investment’s return to differ from that of the broader market. The Fund may therefore underperform the market and/or its peers due to its security specific exposures.
Manager risk: There is no guarantee that the Fund will achieve its performance objectives, produce returns that are positive, or compare favourably against its peers, or that the strategies or models used by the Investment Manager will produce favourable outcomes.
More information on the risks of investing in the Fund is contained in the relevant Fund’s Product Disclosure Statement, which should be considered before deciding to invest in the Fund.
Important information
The Macquarie Core Australian Equity Active ETF and the Macquarie Core Global Equity Active ETF is designed for consumers who: are seeking capital growth and income distribution, are intending to use the Fund as a core component, minor or satellite allocation within a portfolio, have a minimum investment timeframe of five years, have a high or very high risk/return profile for that portion of their investment portfolio, and require the ability to have access to capital within one week of request.
The Target Market Determination (TMD), available at macquarie.com/mam/tmd, includes a description of the class of consumers for whom the Fund is likely to be consistent with their objectives, financial situation and needs.
The Macquarie Core Global Equity Active ETF is a separate class of units in the Macquarie Core Global Equity Fund (ARSN 674 553 201). A separate class of units is not a separate managed investment scheme.
This information has been prepared by Macquarie Investment Management Australia Limited (ABN 55 092 552 611 AFSL 238321), the issuer and responsible entity of the Fund(s) referred to above. This is general information only and does not take account of the investment objectives, financial situation or needs of any person. It should not be relied upon in determining whether to invest in a Fund. In deciding whether to acquire or continue to hold an investment in a Fund, an investor should consider the Fund’s product disclosure statement. The product disclosure statement is available on our website at macquarie.com/pds or by contacting us on 1800 814 523. This information is intended for recipients in Australia only.
Nothing in this document constitutes a recommendation to buy, sell or hold any financial product, security or instrument.
Future results are impossible to predict. This document contains opinions, conclusions, estimates and other forward-looking statements which are, by their very nature, subject to various risks and uncertainties. Actual events or results may differ materially, positively or negatively, from those reflected or contemplated in such forward-looking statements.
Past performance information shown herein, is not a reliable indicator of future performance. No representation or warranty, express or implied, is made as to the suitability, accuracy, currency or completeness of the information, opinions and conclusions contained in this document. In preparing this document, reliance has been placed, without independent verification, on the accuracy and completeness of information available from external sources. To the maximum extent permitted by law, no member of the Macquarie Group nor its directors, employees or agents accept any liability for any loss arising from the use of this document, its contents or otherwise arising in connection with it.
Other than Macquarie Bank Limited ABN 46 008 583 542 (“Macquarie Bank”), any Macquarie Group entity noted in this website is not an authorised deposit-taking institution for the purposes of the Banking Act 1959 (Commonwealth of Australia). The obligations of these other Macquarie Group entities do not represent deposits or other liabilities of Macquarie Bank. Macquarie Bank does not guarantee or otherwise provide assurance in respect of the obligations of these other Macquarie Group entities. In addition, if this website relates to an investment, (a) the investor is subject to investment risk including possible delays in repayment and loss of income and principal invested and (b) none of Macquarie Bank or any other Macquarie Group entity guarantees any particular rate of return on or the performance of the investment, nor do they guarantee repayment of capital in respect of the investment.
Publication date: 15 October 2024
