ETF Exchange Traded Funds (ETFs) 2019

I like Bernstein, his recent “Investing for Adults” booklet series is excellent. However the above is out dated.

Fees / Commissions / spreads aren’t an issue anymore with the larger plain vanilla index ETFs. Brokerage can be further minimised by only buying when one has accumulated sufficient funds.

In fact some ETFs now have lower fees than the wholesale unlisted equivalent. Probably lower spreads as well?

There’s really only one main reason for choosing unlisted Funds and that’s “Behavioural”.

 

PERFECT thanks!!

 

( also for @APINDEX )

Totally agree (for my needs only). I have now liquidated most of my holdings and gone across to Vanguard wholesale managed fund as I desperately needed to switch off my triggers to watch the share price of VAS every day, the angst about when to buy and how much to buy and also I just hated the 'paper' trail with ETF's/shares and trading platforms (a stress factor problem for me).

Now, I have set up an automated Direct Debit via MEBank every fortnight the day after payday and once a year I download my tax statement from the Vanguard online portal to wave in front of my accountant and that is it. Period.

Also, when we enter retirement stage I simply fill out my withdrawal form at the beginning of each year ready for the year ahead and we are done.

Also, when I go to the big armchair in the sky or lose my marbles, my daughters or wife will just have to worry about liquidating one fund and not have to gather decades of 'paper' trail to work out CGT etc etc. (I have just wound up MIL's share portfolio as her executor and it was brutal due to lack of basic document organisation).

When I first read Jack's little red book I the only thing I scoffed at was his dislike of ETF's - but nowadays I understand why and quietly agree. Anyway other's mileage may vary of course.

Now to decide if I liquidate my AFI and WHF (the only two share parcels I have left) now or wait till retirement (both are on BSP/DSSP - I've got my head in the sand on this one and am avoiding/delaying the evil day however. :-/

 

Behaviour is certainly not to be underestimated in its importance.

Oh and the other benefit being simplicity.

 

Great reply thanks @DoggaPP lots to it besides simply the fees..

 

Great job @DoggaPP! You have seen the light for your situation!

My partner is in the same boat as she couldnt really care less in watching vas intra day trading price and all that so unlisted vanguard wholesale funds ( australia fund and international fund ) bpay every month or quarter does the trick for her.

It needs to be noted however you get the close of business day price if you buy and the price you get may be next days price as funds need to go from your bank to bpay vanguard so could be issue for ppl wanting to get out and a little inflexible (this favours the traders via the vas etf platform) and it works in the sell process where if the **** hits the fan and you want out you will only get close of business price or even next day when the funds clear. Also VAS wasnt around during GFC so hasnt been battle tested but STW has been! Either way unlisted funds or etfs and or lics with cash buffers at bank is better than hoarding cash in the ol milo tins and mattresses.

 

Also investing in VAS via the unlisted fund we are still dividend investors as it still pays around 4% as does VAS ETF which it mirrors! Its just the distributions will be erratic due to the trust structure but having cash to smooth the ride will hopefully ensure there will be no need to sell units at low prices thus affecting sequence of return risk and hopefully build the portfolio up so as to just to draw down on distributions as well as interest from bank and divs from a couple ol stalward lics.

My partner has these investments outside super and individual wholesale accounts were preferred due to better tax treatment or bpaying individually as well as drawing down individually instead of high growth or growth fund with portfolio turnover via vanguard albeit it is still low.

 

For those that want to do regular investment in ETFs, one issue I found was that I was never exactly sure how often I should be buying parcels. Invest every four weeks and pay more in brokerage (as a percentage), or invest every 12 weeks but have less invested on average, etc? This uncertainty sometimes led to me not investing regularly when I really should have.

So I did the maths and wrote a calculator to work out exactly how often to invest in ETFs given certain assumptions about growth rates and interest rates on my bank account etc.

You can check it out here: Investment Frequency Calculator

This way you can feel confident about how often you are buying parcels of ETFs, stick it in your calendar and just pull the trigger on those days regardless of what the market is doing. Spend less time worrying about whether you should wait another week etc.

 

I would not classify VDHG as on the high for fees given you get free rebalancing across a diverisifed global portfolio.

VDHG is probably one of the best instruments available. You never need to think, just plonk down your cash periodically and watch it grow.

My only gripe with VDHG is the cash allocation but it is reasonable from a risk management perspective.

If you want to dive deeper you can but it will be a long time before you come out to other side and realise VDHG was the best option all along.

There is also Vanguard's wholesale option which allows small bpay inputs. You'll need $100k up front but it will suit if you want to invest frequently and want to optimise brokerage.

Not advice.

 

I invested through the GFC (still traumitised) and found the 24 hour delay on Bpay very frustrating. on a few occasions. I dropped in a rather large amount on a market bottom (and many when it didn't ;-) , but had to buy at 4% higher prices by the time the transaction hit Vanguard (there seemed to be mis-pricing that day as well). I know this cuts both ways - but prefer to make a decision on the day and have it carried out within ten minutes of making it. Perhaps an ETF for immediate action, and a regular saving plan with an MF would be my optimal combination in hindsight.

 

Just looked at a Reddit thread on VDHG. Wish I hadn't wasted that time!!
The calibre of discussion and knowledge everyone has here in PC (invest chat) is fantastic. We are very lucky.
Thanks everyone for the contributions.

 

I am not that familiar with reddit but have the r/fiaustralia sub bookmarked. Is that the one you mean? I’ve always found most posters to be pretty knowledgeable albeit the dialogue is more aggressive than PC (invest chat)

 

Agreed. Reddit is brutal. Here at PC seems far more measured and engaging

 

Yep - very anti property too.

Cheers

Jamie

 

I can reddit to that

 

Yes I think that's the same one.

 

Hi everyone

I am looking to switch some direct share holdings to diversified global investments (currently I'm 100% Australia). I am aware of VGS, VAE but what else is out there that I should consider? I'm fairly conservative, ok with unhedged, accumulating so ok with volatility or minimal dividends.

Very broad question so I am happy to just take the ticker codes and search back through this site for opinions on them.
Thanks in advance.

 

@Pleep i have been moving some of my direct share holdings to VGS, IFRA and DJRE. I’m a bit conservative because pension phase but am ok with volatility and lumpy dividends

 

This may be a possibility.

IVV

ISHARES S&P 500 ETF details
An iShares fund is an exchange traded fund. The shares of an iShares fund trade on a continuous basis at prevailing market prices. Each iShares fund holds a portfolio of securities managed to generally correspond to the performance of a particular index of stocks or bonds chosen to reflect the performance of a securities sector.

 

You might want to consider IWLD. I don't own it; I use VGS for my international.