Self adjusting ETFs

In ETF Blog, Latest by Simon Brown

One of the great features of an Exchange Traded Fund (ETF) is that they are self-cleaning. This means that the holdings behind the ETF change, as new winners emerge and others fade. The changes to the CoreShares S&P Global Property 40 Index (GLPROP*) is a perfect example.

At listing

This ETF was listed in late 2016 and at the time retail REITs were the dominant sector with Simon Property Group (invests mostly in US shopping malls) being the largest holding.

GLPROP at listing

GLPROP at listing

June 2021

Fast forward to today and that has all changed. Specialised REITs is now the top sector and retail REITs have dropped from 31.5% to 4.53%.

GLPROP sectors June 2021

GLPROP sectors June 2021

Simon Property Group is still in the top 10 but weighted at 4.5%, down from its earlier weight of 9.07% while Prologis (a US REIT that invests in logistics facilities, with a focus on the consumption side of the global supply chain) has gone from 3.98% to 9.4%.

GLPROP Top Holdings June 2021

GLPROP Top Holdings June 2021

Tech weights

Specialised REITs include self-storage but data centres make up the largest slice of that sector. So this ETF has, in less than five years, reduced its weighting in retail and increased the weight of tech orientated stocks. We’re seeing more tech in the industrial REIT sector as well as it includes logistics, which are increasingly focussed on e-commerce.

This is why we hold ETFs. They are truly passive – fire and forget. Over time the hot stocks and sectors will come and go and the ETF will adjust accordingly to accommodate these changes.

Below is a chat I had with Chris Rule from CoreShares about this trend. He starts at 14:30.

The Sygnia ETF, SYGP, covers the same index and as such would have the same underlying stocks and weighting.

Simon

*I hold this ETF


 

At Just One Lap, we are big fans of passive investment using ETFs. In this weekly blog, we discuss ETFs on the local market and the factors you need to consider when choosing an ETF. If you have wondered how one ETF differs from another, this is where you can find out. We explain which index each ETF tracks, what type of portfolio could benefit from holding each ETF, and how the costs will affect your bottom line.

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