Digging deeper into ETF holdings

Digging under the hood of ETF data isn’t something everyone does yet as the world of investing is being impacted by a variety of unforeseen events (rise of retail investors piling into short squeezes, rising bond yields and the potential for a rotation out of favoured technology plays) there is a need to be aware of what’s in your basket.

If you’re an institutional investor then you may have access to the variety of financial data platforms out there like Bloomberg, Factset, Refinitiv, Capital IQ, Morningstar or IRESS. If you’re in the retail trading game, whilst you may be privileged enough to afford one of those tools, it’s likely you need to look for other options (apart from going to every single ETF providers page to look at the holdings data). There are a few that we mention on the resources menu of this site but they are paid for services (with the exception of Koyfin at this stage and us). ETFdb.com and ETFlogic.io both give users the ability to look into ETF holdings but they are paid services so does that mean you’re stuck if you don’t want to look? Well, no.

If you’re interested in ETF holdings data there is also Yahoo Finance which lists global ETFs on its site and also includes holdings data. This is limited to the top 10 holdings for ETFs but even just analysing this can give us some good insights into what those ETFs hold and we’ve done some analysis on them for the Australian market.

Firstly, not all ASX and Chi-X ETFs showcase holdings. Actively managed ETFs are typically non-transparent as the advantage of those is the low cost of an ETF but requires skilled management of those funds which would be disadvantaged if they showcase their holdings. Of the 200+ ETFs listed on the ASX and Chi-X, we are able to analyse holdings for 155 of them.

Next, the weight that the top 10 holdings have in an ETF can vary as widely as being 100% of the ETF to as low as 10% and anywhere in between. The average weighting that the top 10 holdings have across the 155 ETFs analysed was 44%. This may rise and fall over time and we’ll keep an eye on that figure.

Next, we also looked at which equities appeared the most in the ETF holdings data and to no surprise we saw some big names in there. For domestic equities it was CBA which appeared in 19 ETFs and an average weight of 11% and next highest was BHP, appearing in 18 ETFs and an average weight 10.5%.

CBA weighting across ETFs (as part of Top 10 holdings)

BHP weighting across ETFs (as part of Top 10 holdings)

AAPL weighting across ETFs (as part of Top 10 holdings)

MSFT weighting across ETFs (as part of Top 10 holdings)

Globally the highest was Apple, appearing in 19 ETFs and an average weight of 6.5%, followed by Microsoft with 16 ETFs and an average weight of 5.4%.

I reported on these figure on ausbiz last week 9th February but here are some further figures.

55 ETFs had more than 50% of their holdings covered by the top 10, 25 had more than 80% covered by top 10 holdings, 18 had 100% of their ETF covered by top 10 holdings.

Whilst CBA average was 11%, it’s highest weighting is in QFN (28.5% of that ETF) and its lowest was in FLOT (2.2% of that ETF)

Other highly used domestic equities appearing in Austrlaian ETFs were

  • National Australia Bank (16 times, average weight 7.4%)

  • ANZ (18 times, average weight 6.5%)

  • Westpac (16 times, average weight 7.3%)

  • CSL (14 times, average weight 7.3%)

  • Wesfarmers (18 times, average weight 5.0%)

Across other highly used global equities we saw the following:

  • Tencent Holdings (11 times, average weighting 6.8%)

  • Amazon (14 times, average weight 5.1%)

  • Samsung (6 times, average weight 10.2%)

  • Alibaba (9 times, average weight 5.5%)

  • Tesla (15 times, average weight 2.9%)

So, what can you do with information like this? Well, looking at the ETFs you have in your portfolio or watchlist, you can assess them to see if you’re happy with the holdings they have. You can also see how much crossover between similar holdings there is for your ETFs. You may be exposed to an ETF because you like a particular stock but prefer the diversification benefits of holding it in a basket. Seeing that same stock appear multiple times may not be to your liking as it goes against the diversification you were after. Additionally, you might see that some ETFs are very similar in what they hold and this could lead to a further loss of diversification benefit you thought you were getting.

I'm still looking at options to release this info either within the ETFtracker application or a separate app but it does need some further analysis (at least a few weeks) as I test the efficacy of the Yahoo Finance data. If I don't see a feasible way for getting it into the app I will at least create some sort of monthly, fortnightly or weekly review of the holdings (depending on how frequently the tables are updated).

Anyway, hope this helps for now and for further reading on holdings and ETF risks, check out the following:

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