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Home / White Papers 2022

The Australian Concentration Conundrum

VanEck
18 August 2022

Executive summary

Factor investing, once only the realm of institutional investors, has grown in popularity among all investor types over the past two decades with the emergence of exchange traded funds (ETFs) that track factor-based indices. Globally, factor-based ETFs assets under management is approximately $1 trillion as at 17 June 20221, with the majority of strategies covering global, European and US equity markets. In this paper we explore whether factor investing can be replicated effectively in the Australian equity market.

The Australian equities market is one of the most concentrated by stock and sector. The universe is also small relative to global markets. This paper shows that these nuances present challenges when assessing factor strategy efficacy.

We will show that despite these challenges, there is an alternative way to invest in a diversified portfolio of Australian equities that has historically achieved excess returns over the long term and is supported by academic research.

Download the full paper here

VanEck

18 August 2022

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