The VanEck Australian Banks ETF (MVB) provides simple concentrated exposure to Australia’s major banks, although Macquarie Group (ASX: MQG) is the largest position, ~23%, due to its recent outperformance, whereas Commonwealth Bank (ASX: CBA) now comes in third, ~19%, demonstrating how the ETF reweights towards the strength. Over the years, this ETF has offered a simple and fairly cheap way to gain income-focused exposure to the high-yielding banking sector, which may feel soft today, but after a 13% correction, its yield by definition has risen.
- Over the last 12-months the MVB ETF yielded ~5.3%, paid quarterly, but with notably less franking than the VHY ETF, plus it’s down ~1% year-to-date.
The markets clobbered the banks since Westpac’s (ASX: WBC) increased bad debt provisions last month. In the past, such a pullback would have been regarded as an excellent buying opportunity. However, in the current environment, we prefer the VHY ETF with its broad stock mix delivering a better yield and more focused on the beneficiaries of the budget as opposed to just banks, which look likely to underperform through 2026.
- We can seed the MVB ETF rotating in the $40-45 area over the coming months while delivering a solid yield along the way.
