What brought BetaShares Global Quality Leaders ETF under the Spotlight?

Summary

• A leading manager of ETFs, BetaShares Global Quality Leaders ETF providing over 60 products, became the topic for discussion because of digitisation of the BetaShares Fund Tax Statements and insights on July 2020 market trends.
• Tax statements have now gone digital which was earlier provided via post.
• The global equity market continued to show recovery in June 2020. Reasons influencing the markets were relaxation in social distancing restrictions, ease in monetary conditions, and the influence of US monetary stimulus.
• BetaShares funds like MNRS, ATEC, DRUG performed strongly during the month. Substantial gains also noted in funds like HEUR, QFN.

BetaShares Global Quality Leaders ETF (ASX:QLTY) is a leading manager of ETFs and other Funds that trade on ASX. The fund was founded in 2009 to provide intelligent investment solutions to assist Australian investors in meeting their financial objectives.

The ETF has more than 60 products available and presently provides the broadest range of exchange-traded products in the market which trade via ASX.

BetaShares Global Quality Leaders ETF got listed on 7 November 2018 on ASX and has provided a decent 28.29% return. In the past 12 months, the ETF has provided a return of ~15%. On 10 July 2020, each unit of BetaShares Global Quality Leaders ETF was trading at A$19.470, down 0.154% from the previous close. The price at which each unit was trading is considerably higher than the 52-week average price.

QLTY’s asset class includes:

• Australian Shares
• Cash and Fixed Income
• Commodity
• Currency
• Ethical
• Hybrid
• International shares
• Multi-Asset
• Property

BetaShares ETF investment goals comprise of:

• Capital Appreciation
• Income Generation
• Portfolio Diversification
• Risk Mitigation

Recently, BetaShares released two updates. The first was the digitisation of the BetaShares Fund Tax Statements, and the second was an on the July 2020 market trends which brought it under the spotlight.

In this article, we would be looking at these two updates.

BetaShares Fund Tax Statements goes Digital:

Every year in July 2020, BetaShares provide tax statements in all BetaShares funds that have paid a distribution during the previous financial year. Earlier, these statements were printed and sent across all unitholders via post. However, this year, these statements have gone digital and will be communicated to the unitholders electronically. In July 2020, the statement covers the period starting from 1 July 2019 till 30 June 2020.

BetaShares has also made this clear that the statement would not be sent through the post unless it is specifically requested through the link. The objective for going digital was the convenience of the unitholder and to reduce the carbon footprint related to the paper-post sends.

Global Market Trends:

On 8 July 2020, BetaShares provided market trends for July 2020.

In June 2020, recovery was seen in the global equity market, which reflects a lift in some economic indicators like the ease in social distancing restrictions. The investors remained convinced that central banks will keep monetary conditions very easy. Further, the influence of the US monetary stimulus was seen in other markets as well as additional ease in the US Dollar and bond yield and further gains in gold.

In local currency terms, the MSCI All-Country World Equity Return Index improved by 2.9% after a gain of 4.3% seen in May 2020. The global bond yields were firmly in the downtrends while the gold price was opposite to that and was firmly in the uptrends.

Global equity fundamentals:

BetaShares highlighted that the rebound in the global equities, of late, was majorly because of a strong rebound in PE valuations along with the growth in the PE valuation from 14.7 at March 2020 end to end of 19 June 2020.  Based on the recent historical standards, equities are also expensive as compared to bond yields with the equity-to-bond yield gap easing of late to 4.3%.

Over the recent months, there was a sharp fall in the earnings which reflects downgrades to earnings prospects has supported the valuations.

The positive aspect regarding the global forward earnings is that June 2020 has seen the first uptick for 2020 because of the slowing in the rate of earnings downgrades. In case, there is no further drop in the earnings expectations, BetaShares projects a still-bullish outlook in CY2021. It would push up the forward earnings in the coming months.

Sector and Regional Equity Trends:

Currency-hedged and Australian funds:

Source: Bloomberg

As per the above image shared by BetaShares, the outright and relative performance trends of the indices tracked by BetaShares’ global currency-hedged and domestic equity funds keeping the bench as MSCI All-Country Equity Index in local currency terms.

The strongest performance was noted in global gold miners (MNRS), Australian technology (ATEC) and global health care (DRUG). MNRS and ATEC delivered 50% return in June 2020.

Impressive gains were also seen in European equities (HEUR) and local financials (QFN).

Unhedged global funds:

The BetaShares’ global unhedged equity funds when compared with the MSCI All-Country Equity Index in unhedged Australian dollar terms, the strongest performance was seen in Asian technology (ASIA), the NASDAQ 100 (NDQ) and global cybersecurity (HACK).

Below table published by BetaShares would throw some light on the performance:

Cash and bonds:

In the local bond market, overall bond yields experienced new lows in June and credit spread has broadened further. This resulted in fixed-rate bonds to outperform cash, particularly longer-duration corporate exposures, narrowing credit spreads that supported hybrids and floating-rate bonds.

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