1st time buying shares

There shouldn't be any consistent difference in returns between VAS and STW.

I like VAS because Vanguard makes it easy, but kind of also because the broader ASX300 universe may capture some up and comers.

But I suspect that's just sophistry. Both are close enough and big enough.

Having observed the recent market contortions (and wishing I had taken profits a few months back) I would stick to the big guys however. I've seen some small and mid-sized ETFs do funny things through lack of liquidity.

This is another reason I like Vanguard's managed funds. I buy and redeem from them at a set price.

There is, however, a difference (with Vanguard) between the distributions of the ETF and that of the underlying managed funds. (And, to confuse you more, an even bigger difference with the distributions of the retail fund compared to the wholesale fund.

Whilst total returns are similar, for some reason the retail fund pays out much higher distributions than the wholesale fund, which pays out slightly more than the ETF. Depending on your tax situation this could be good.

 

It Should be one is tracking top 300 companies and the other track top 200

 

I read somewhere that all you need is 20 shares to track the index.

Certainly there hasn't been any difference long-term:

 

Yea ok I just got that from papers also. I personally don’t invest in it but have heard much about it delivering returns like that from people who have. Check out L1 also.

 

There is a differences but it not big enough to show up on a long term chart as the gaps are usually about 0-1% and over a long period of time getting an extra basis points in dividend each year could worth a bit

 

I don’t follow them closely but you’ve graphed it from March 19. As said in the other article since 2000 they’ve supposedly done 20% IRR.

And yes large cap funds is not where the value is normally.

 

Again, the test the active dudes currently set is when markets plunge.

Assuming you mean the L1 fund, it is down 41% in the last month, and 43% for the year.

Given even I was nervous back when the virus news first came out in February (but failed to do anything because of CGT fears), an active manager making the same mistake doesn't really justify the fee.

Of the ones I track, the Hyperion fund linked above and the Magellan Global seem the best at earning their fees in the current market.

But, given volatility, that could change overnight.

 

L1 long short is down 7% in Feb I think. And the L1 index fund was down 2%. Where you get 41% from actually curious?

 

I got it from LSF ASX listed fund via Sharesight. Nabtrade has it down 43.2% in the last year.

 

Our Funds - L1 Capital

Nah look at the long short fund here

There was one horrible year but I think they still come in at 20%+ IRR if you held start to now

 

Oh yea. Buffett advice rings true in times like this. Don't lose money which I assume means don't lose your capital. Stay in the game and you'll be fine

 

I use selfwealth to buy and sell shares.

The US market is the biggest market so you may want to look at VTS.
If you are into tech then NDQ, TECH, ASIA ...

 

Wow some interesting discussion has come up since I last checked in. It will probably take me a few days to read through everyone's posts and links properly but thank you everyone for sharing your thoughts.
I just wanted to say that we jumped in today and bought VAS at 62.20 thanks to everyone for helping us do something new for the first time.

@luckyP thanks for the tip but I wasn't sure if there were some complicating paperwork issues with VTS?
@Omnidragon if we're playing with fire then let's hope i'm a fast learner
@Skinman thanks for being understanding! Appreciated. I know I am coming across as a few forks short of a cutlery set but you're right... beginners need to begin somewhere and I'm smart enough to know that if half the professionals can't beat the market then me knowing as little as I do sure isn't about to.

 

Good stuff. I am also watching VAS. It's boring, low risk and low return. Suits my risk profile and investment goals perfectly!

 

For the OP.

This series of posts by Omni is exactly why you must do your own research (DYOR).

I think investing in index funds is a proven long term strategy for average returns.

I did what you are doing, post GFC and did it all with direct shares that had been overly punished by the market but had strong cash reserves, meaning they were less likely to go broke during the downturn.

But I did a lot of research and spent a lot of time learning the process.
I made lots of mistakes, took some risks that didn't pay off but overall did very well.

If I was in your shoes, I would wait a bit longer and deploy your funds once there is more certainty around the US (in particular) and Europe's new cases plateauing.
By then there should be some more info on how the economy is shaping up and the bottom will start forming. This is risky though.

I would also be looking at direct shares as per my GFC experience above and make your limited funds work harder. Also risky.

The Aussie oil/gas space is a good place to look as they have been hit by the oil price war and CV double whammy. Just make sure the companies have high cash reserves to see it through.

All of this is what I would do if I were you based on my risk profile and the amount of funds you have to invest. But I research a lot, and want to make my money work harder than the index during opportunities like this. If you just want to get in without doing a lot of work then index funds all the way.

DYOR and risk assessment.

 

Did you do better buying your own shares?

 

Yeah I did, beat the index by a long shot.
Arguably sold out too early and missed more gains but I put the funds into Sydney property which worked out well too...

 

Thanks for your input, very interesting!

The links people have kindly shared show that over the long term the vast majority of managed funds do not outperform the index but I'm wondering how this compares to individuals like yourself picking your own shares? I assumed I wouldn't be able to beat the index if most fund manager can't. I guess there probably isn't any way to know how people go on average, but I'm wondering if there is an advantage to buying and selling as an individual compared to the fund manager or is it actually even harder to beat the index because they are able to buy and sell in bulk and get better brokerage rates?