ETF Exchange Traded Funds (ETFs) 2019

Curious as to why?

He's certainly one of the more entertaining finance writers, and I've generally found him willing state the obvious things that everyone is avoiding. Used to enjoy his stuff when it appeared regularly in the papers, but have lost sight of him in recent year - this is the first I've seen in a while.

 

Great podcast on Bogleheads ends up talking in depth about Value ETFs and quant approaches. Once you get past the fascinating personal story at the start.
This guy indicates deep value across wide range of stocks (like VVLU) is probably picking up mispricing to generate more returns, rather than picking up more risk. But it's always debatable.
Episode 009: Dr. Wesley Gray, host Rick Ferri
I always thought it would be @Nodrog talking to himself on here , but it seems it's me!
Maybe I should move to the investing resources thread.

 

Key takeaway...don't invest in companies who build yachts!!

 

Share Price & Information - ASX

 

Vanguard Australia

It's been 10 years since we launched our first ETFs in the Australian market and to mark the occasion, we spoke with industry experts and clients about the ETF journey and why they have become one of the most disruptive forces in the investment market.

 

Hahahaha thanks @SatayKing Seems Austal has had an impressive year - NPAT up 64% and dividends up 20%. Is this another of your sneaky share purchases?

 

Nah. No matter how tempting direct share holdings is strictly forbidden. Evil, evil, evil

 

Just came across this article from a years ago about a famous ETF "flash crash":

ETF providers scramble to put Aug. 24 'flash crash' in rearview mirror

Thoughts? Do we trust these market makers to "be a bud" in the event of a catastrophic market fall??

 

When something like that happens there's impacts all around

Market Makers hitting the brakes, High Frequency Traders, Stop losses being triggered yada yada

 

As you are all interested in the share-market - I thought this was a useful take on a few matters:

The speaker at 19:24 gives an interesting view on the unknowable timing of interest rate increases, and the possibility that stock profits are not as recession dependent as they once were. The argument is that stocks are actually cheap at the moment relative to bonds - and that this may not be a temporary situation.

There is also a particularly interesting talk at 7:40 on the ETFs that "liquify the illiquid". VAS and STW would not fall into this category - but it is interesting to think about what could go wrong in the ETF space.

 

May I ask of peoples thought on the ETF: VAF?
I've been adding to bonds and I hope to hold about 30% Cash/Bonds.
Is this something others can resonate with or do others prefer just holding Cash?
The reason why I like holding a bond is having Cash, we as a family, are more likely to access it for other reasons and I find putting it away helps with the discipline.
Would appreciate others thoughts on Bonds, specifically an ETF like VAF.
Cheers n

 

Michael Burry Trashes Index Funds – Are We Screwed?

 

@Ariyahn2011

Bonds have had a good run of late (VAF vs ASX300 below)

 

Thanks Redwing.

I did see they have had a good run up. With interest rates possibly going to reduce further in the coming year/years, I am comfortable holding a bit

 

Can anyone explain the differences between the AU domiciled and US domiciled funds. I understand that you need to complete the W-8BEN forms for US domiciled funds in order to reduce the withholding tax as an AU citizen, however what differences arise if the fund's tax election status isn't AMIT? My understanding is that if the fund has elected to be AMIT, then assuming the tax distribution is $100 and your cash distribution is $98, then the additional $2 that you have "received" will vary your cost base of the purchase. In terms of non-AMIT funds, what happens to the additional $2? How do you account for it? Is there any other relevant differences between the AU and US domiciled funds?

 

Australian investors have a stronger home country bias than many other developed countries. This bias equates to an over-weighting of around 70% relative to Australia’s market capitalization, which only represents around 3.5% of the global equity market.

Dividend imputation Australian investors place a higher value on companies that pay dividends with imputation credits attached to them. This can be witnessed by investors’ behaviour following the payment of dividends, when share prices typically drop more than the cash value of the dividend.

Dividend imputation credits can provide a significant boost to performance for Australian investors. Franking credits currently add around 1.4% to Australian share yields, based on the current dividend yield of 4.4% for the S&P/ASX 300, which rises to 5.8% when grossed up.

Research paper

Optimal Domestic Equity Allocations for Australian Investors and the Role of Franking Credits


Abstract
Private investors around the world tend to have an excessive preference for shares of companies based in their home country. This home bias may be further strengthened if domestic equities receive preferential treatment by local tax laws. Australia’s franking credit system is one example of preferential treatment for domestic equities. Franking credits reduce investors’ tax liability on the dividends received from domestic companies but not on those from foreign companies. This tax advantage, and the solid performance of the Australian equity market over years, has led to very high, even excessive, allocations to domestic equities in the portfolios of Australian investors. In this article we describe how this strong preference for domestic equities can erode the wealth of Australian private investors over the long term and propose an optimal allocation to domestic equities for Australian investors.

 

Upcoming Dividend
Company Name: Vanguard US Total Market Shares Index
Ex Dividend Date: 17 Sep, 19
Dividend Pay Date: 15 Oct, 19
Amount: 86.47 cents per share

 

No part of the index Job is also tracked the underlying index performance, so even if people don’t exit index fund directly , the individual who hold shares directly decided to exit will affect the stock Price that in turn affect index fund price.

In market panic there is no where to hide they all tar with the same brush.

Even if there not a single seller or buyer of index fund during that time
Index operator has to adjust the index price by their bid and ask to match the market .

Also this is the age of machine and algorithms
If there is any pricing mismatch, they will
Exploit it within seconds to bring things into
Line
So if the market is down 3% and index tracking down 2.5%, machine would sell the index and buy the market future contracts and
Exploit the differences then price
Will fall and match that 3%

 

Thanks for posting that journal article. I've read the full text and in a nutshell it was saying that franking credit benefits means we probably should assign a decent proportion of our portfolio to domestic shares. Around 50-60% depending on income tax etc. This aligns with my prior thoughts so I'm happy . Whenever i look at efficient frontier analysis etc. I always end up with around that % domestic.

 

From today's afr

"Low cost investment exposure" ???

Sovereign wealth fund to fix super: Tuckwell

Quote:

doesn’t actually accept the label “passive investing”. If you’re choosing your ETFs – by geography, by commodity, by theme – then in his book you are in effect allocating actively. Tuckwell says 90 per cent of portfolio performance is based on asset allocation.
Asset allocation accounts for 90 per cent of portfolio performance, Tuckwell says. Domenico Pugliese
“If I say I’m now going to invest in 20 low-cost ETFs and I’m going to choose 15 per cent into Australian equities, and 10 per cent in Australian bonds, and you’re going to have Asian equities, Asian bonds, real estate, etcetera, I would argue that that’s very active investing, in the sense that it’s active asset allocation,” he says.

It’s the same tactical allocation that active managers do, he says, but you use ETFs to keep the fees down. “Instead of calling it passive investing, it should be called low-cost investment exposures.”