Updated: Mar 4
It was a great opportunity to get on the Equity Mates segment for ausbiz earlier this week and talk about all things ETFs with Alec and Bryce. In this episode we got to chat about ETF holdings as well as where are some good apps and data on ETFs. Whilst we covered quite a bit more than I normally get to talk about on ausbiz, I thought I should write this article to cover it in a bit more detail and also go over things we didn't get to go through on the show.
In the first half of the episode we looked at ETF holdings. To begin with what they are, they relate to what goes inside the ETF and these can be in the form of equities, bonds, options, indexes and more. ETF issuers will publish the data that goes into their holdings on their websites (and typically update them each day). There are also publishers who showcase what these holdings are in a variety of formats.
Holdings are important because they let you know what the ETF is all about. Despite what an ETF might say on the cover, you should not only choose it just because of how it sounds. If you're after exposure to certain themes or you want to know how much weight a certain stock has in an ETF, you look at the holdings. If you want to know how much of an exposure an ETF has to certain sectors or geographic regions, you look at holdings.
On the show we spoke about some analysis I did on BetaShares holdings (with data as of 26th February). For ETFs where holdings data was shown I could do this type of analysis which shows the global spread of BetaShares holdings with dot size based on how big the notional value is ($14.4 billion in total / $15.4 billion market value). This is based on equities and other securities which have geography tagged so it does miss a few things but we do get a pretty clear picture of the range of coverage here. It's quite wide.
Having the holdings data like this also allows for the ability to do somethign more interactive like clicking on different ETFs to see what sectors they're exposed to, across which geographies and also see what equities are in those holdings (all shown in this case by notional value).
NB: We'll be adding some apps that explore ETF holdings in the future. Only done BetaShares stuff for now.
This data is available by most issuers to download so analysis is easy once you've pieced it together but for those wanting to get a shortcut to this, they can look at apps that provide this information such as ETF Logic which we talk about later on.
Looking at holdings is important because you can protect yourself against various sorts of concentration risk which goes against the mantra of diversification benefits. When your ETFs are concentrated (either within the single ETF or across ETFs) you run the risk of amplifying your losses. There are a few ways this might occur, including:
Correlation - looking at what is in the basket of holdings within your ETF is one thing, seeing how correlated their share price performances are is another. If you find there is strong correlation then what happens to one is likely to happen to another. Recently we saw a technology sell-off and stocks with high levels of correlation (or beta) did poorly as well.
Exposure to poor performing themes - as mentioned above, stocks exposed to technology sectors did poorly recently with many sold off as global bond yields showed signs of increasing. If a lot of yuor ETFs have technology stocks in them, you're likely going to be affected by this exposure.
Ways to tackle this would be to ensure you're aware of what's under the hood when it comes to ETF holdings and you can do that by being aware of some of the apps and datasets that are out there.
APPS and DATASETS
In this second part of the show we looked at the various ways investors can get educated about ETFs and where they can trade them. Below is some of the list I went through. It's not exhaustive but does cover a good amount that will get you started.
The following links are a mix of both Austrailan and globally focused insights that I've split across a range of categoreis depending on what tickles your fancy.
Reading (getting started)
Investopedia - www.investopedia.com/terms/e/etf.asp
ETF Issuer publications/courses (e.g. BetaShares Education Centre - www.betashares.com.au/education/, Vanguard - How to get started - www.vanguard.com.au/personal/education-centre/en/insights-article/etfs-how-to-get-started)
Reading (news updates)
Whilst not all of these are Australian focused, for global ETF investors these are some great sites to be aware of
Australian Financial Review - www.afr.com
Livewire Markets - www.livewiremarkets.com
Wall Street Journal - www.wsj.com
Financial Times - www.ft.com
ETF Stream - www.etfstream.com/tags/australia
ETF Trends - www.etftrends.com
ETFGI - etfgi.com
Podcasts (look these up on Spotify, Apple or other podcast places)
ETF Edge by CNBC
Australian Finance Podcast
History of ETFs on Bloomberg
There's also this one from ETF Logic that's available on its site
Speaking Logically - www.etflogic.io/podcast/
ausbiz - www.ausbiz.com.au
Equity Mates on ausbiz - www.ausbiz.com.au/topic/markets/equity-mates-on-ausbiz?topicID=212
Tracey Edwards - www.youtube.com/watch?v=uLEOcoD-nL8&t=75s&ab_channel=TraceyEdwards
Investing with Rose - www.youtube.com/watch?v=vGcOGYkttI4&ab_channel=InvestingWithRose
Yahoo Finance - au.finance.yahoo.com/ (and search for your ETF)
Market Index - www.marketindex.com.au
There are also datasets available from major market data providers like Bloomberg, IRESS, Factset, Morningstar, Refinitiv.
ETF Logic - www.etflogic.io/
ETF Database - www.etfdb.com
ETFtracker – www.etftracker.com.au (this site)
Koyfin - www.koyfin.com
CommSec (or CommSec Pocket)
If you're after tools to do portfolio tracking you can do this within those apps you see above but also you could download the data from Yahoo Finance or use Google Sheets to harness Google Finance data.
For Yahoo Finance you could simply use their portfolio tools online to create and keep an eye on your portfolio or you could download the various set of information you need into Excel and do analysis from there.
For Google Finance afficionados, you can check out this spreadsheet below. Make sure you make a copy and save it as your own as the owner won't respond to requests for access