ETF Exchange Traded Funds (ETFs) 2018

Yeah I don’t buy equal weight generally. The US experience going back to 1994 is different. 1% outperformance before tax and 10x higher portfolio turnover than the index. Note also underperformance in recent years due to large cap growth driving the market;

https://www.msci.com/documents/10199/81912e51-32fa-418a-b30d-0f6c0782a93b

That turnover figure is going to become increasingly important if Shorten gets in and further winds back CGT discount as he intends.

Note also that in the Australian product that performance diverges from late 2015, this was period of Banks SP topping out, it’s been down ever since. Lots of money went then to EX20 which equal weight picks up. Will be interesting to keep an eye on this product in coming years as market cycles change. Having said all that, there “may” be something in it due to the construction of the Australian index...post tax is going to be the key.

 

Interesting you mention EX20. I’ve seen it suggested that outperformance of equal weight at times is more to do with greater exposure to mid in particular and small caps which is what can typically occur with equal weighting. This would be very pronounced in ASX given the huge concentration at the top end.

Hence a much cleaner and cheaper way with minimal turnover to achieve this potential outperformance is to simply invest separately with greater weight in a mid / small cap ETF in addition to holding a large cap dominated ETF?

If Labor is successful in scrapping franking credit refunds and halving CGT discount then for retirees / low income earners who would be losing the benefit of most of the franking credits then periodically selling then rebuying same to reset the cost base upward could be a useful strategy. Being profitable it shouldn’t be classed as a wash Sale even if buying back the same ETF. Excess franking credits would offset the capital gain. Then down the track if one does need to sell part holdings for living expenses there will be much less of a CGT hit?

 

@David@Sharesight the above is exactly the type of scenario where it would be good to be able to easily compare investment performance from different mixes of holdings.

Scenarios like compare over a timeframe:

20% IOO + 70% VAS

with

30% IOO + 40% VAS + 30% VSO

Currently fiddly to do.

 

Sure, you could overweight mid cap by going ex20 in addition to cap weight. In theory equal weight picks up "smaller" but not small, and value factors. I've not looked at EX20 products and dont really have a view on this.

 

How Sharesight makes ETF tax admin easy | Sharesight

 

@oracle What about replacing VGS with IVV and IXI - would that work?

 

I think it's personal preference. Consumer staples index has some great companies that has achieved superior returns in the past. If it helps you sleep well at night knowing your money is invested in some of the biggest consumer brand companies go for it.

I am still fan of cap weighted index funds for the simple reason no matter which sector/industry/company does well in future the cap weighted index fund will reflect that and I do not need to form a view.

Cheers,
Oracle.

 

For international exposure I have a mix of:

• IJR Ishares S&P 600 smallcap Investment Management, Risk & Advisory Services | BlackRock
• IVV Ishares S&P 500 Investment Management, Risk & Advisory Services | BlackRock
• IOO Ishares Global 100 Investment Management, Risk & Advisory Services | BlackRock
• NDQ Betashares NASDAQ 100 NASDAQ 100 ETF | BetaShares

Has proved to be a successful mix for me. My total returns this financial year are:

• IJR 25.9%
• IVV 18.99%
• NDQ 18.88%
• IOO 15.97%

As they've had a good run I decided to reduce my holding by redeploying some profits.

Very important you buy at the right price. I keep it simple and generally try to buy below moving averages. I timed my buy of NDQ right at the dip of the dow in early February.

 

Wells Fargo, JP Morgan, Citi will hike dividends, buy back more stock after passing Fed stress test

Full article here

Recently Apple annouced $100 billion stock buyback and increased it's quarterly dividend by 16%. See here

This is music to the ears of investors. Technology stocks profits and share price are going gangbusters. Financials are doing well. US economy is doing great and investors are benefiting big time.

Cheers,
Oracle.

 

Hi all,

Just wondering whether VAS is giving 0c dividend in July as I found on the morningstar? I am just very new to ETF. Thanks.

Upcoming Dividends - Morningstar.com.au

 

No. VAS distribution is 101.7294 cents per share.

https://www.asx.com.au/asxpdf/20180703/pdf/43w7qc0jmmxlcv.pdf

 

Oh ok. Great. Thank you @Martin73

 

An interesting Vanguard Article, considering the large number of articles and podcasts concerned with the growth of indexing.

Five graphs that dispel common myths about indexing

 

Anyone else watching/buying Asian/emerging markets at the moment. I have added to holdings of VGE (emerging markets) and VAE (Asia ex-japan) this week. Both down around 10% in the last month, mainly on trade war fears.

Feels like a buying opportunity to me, time will tell (gulp!)

 

It’s a China question right? Take a punt.

 

FACTOR INVESTING:

Lessons from Cliff Asness

 

I bought a small parcel of VAE as my very first ETF on Wed based on the 6 monthly lows. It’s a punt like @The Falcon has said but I’m holding long term.

 

If buying VAE is a punt, what does that make bitcoin? It's a safe long term bet IMO. If China dies an irrecoverable death it would be a black hole that would pull the entire world down.

 

On a brighter note, it looks as though the total distributions from VAS this year is over 10% higher than last year.

Assuming not much of that is from turnover, it bodes well for LIC dividends also.

I believe a large boost to mining profits and dividends have helped this year along with modest dividend growth from other parts of the market/economy.

Roll on dividend season!

 

Yeah I knew I might get a comment based on the wording I chose. I meant punt as in short term price and could have sat on the sidelines awhile longer to see if prices continue to fall. As I said it’s a LT hold so I’m comfortable and I’m DCA’g while accumulating