Vanguard Australian Property Index ETF (ASX:VAP) $92.30

The Vanguard Australian Property Securities ETF (AVAP) provides exposure to the A-REIT sector, across 36 holdings spanning retail, office, industrial and infrastructure property. With fees of 0.23% and a yield of ~3.3%, it offers a low-cost way to access listed property, although returns have been modest (~6.2% p.a. over five years) given the headwind from rising interest rates.

• With MM believing it’s close to/or at, as “bad as it gets” for interest rate perception this ETF and sector should enjoy improved relative performance moving forward.

However the problem with this ETF is concentration. Goodman Group (ASX: GMG) makes up ~35% of the portfolio, with the top 4 holdings accounting for ~60% of the ETF. In practice, this means VAP behaves more like a Goodman proxy than a diversified property ETF—when GMG moves, so does VAP.

• We can see increasing value in the VAP ETF but would rather invest in the sector via individual stocks as opposed to the concentrated ETF.