ETF Long Term ongoing ETFs ideas

Please read the article I linked, it does a great job of explaining how you should approach currency risk.

If you go without a hedged option like VGAD and then look at your overall currency exposure, including equities, property, cash etc. If it is already on target Eg 50-65% AUD exposure, there might be no need to add additional AUD exposure via VGAD

 

i realize i will contrast several other opinions , but here goes

i chose VAS BECAUSE it covered the top 300 ASX stocks , that is 100 extra mid-cap stocks that MIGHT grow into a large cap in a few years time , sure it will also capture more duds but given the former top 20 stocks that have slipped MUCH lower in the index ( AMP is NOT unique is this , sadly ) , 300 stocks with a slightly smaller concentration of the 'blue chips ' might be a good thing in the current Australian scenario , since you are looking for long term growth .

now i DRP both VAS and VHY , and once the divs are reinvested VHY ( in the almost 10 years i have held both ) has outperformed VAS ( past performance is NOT a reliable guide to the future , of course ) higher div. payout buying cheaper units ,

should you CONSIDER LICs yes , a LIC might give you a better strategy but be careful of the fee structures , and 'key person' risks ( i prefer LICs but i love irregular buying and unusual strategies , and that may be distracting for you )


now IF the market plunges deeply again would VLC ( or similar ) be a better deal for a brief foray , allowing you to add extra 'blue chips' ( too big to fail philosophy ) in a time of uncertainty

VGS and VGE i haven't researched properly so will not comment on them

what could go wrong ??

in a time of probably unfathomable debt ( considering many derivatives are not publicly disclosed ) , almost anything , given a small family-owned investment fund managed to default on somewhere between $20 billion and $100 billion ( and maybe even more )

this could be the first tiny crack in the eggshell , you have several MAJOR banks impacted when they already had existing problems ( caused by Greensill Capital and other issues )


long term ??

several wise heads claim we are in uncharted territory , will the world embrace the pain and implement the needed remedies , not right away and only as a last resort , , that is the way the majority do things ( especially when governments survive on popularity )

 

+ 1

 

What % of the fund are stocks 200-300 and is their growth while in the 200-300 band going to drive any meaningful outperformance over say A200? Once they enter top 200 the other ASX200 ETFs are mandated to hold.

Disclaimer - I prefer VAS

 

From memory the ASX 200 is about 90% of the entire market while the ASX 300 is, again from memory, 92%. So bet on 2% being massive winners?

 

i chose VAS in 2011 because i was chasing growth AND using VAS as insurance against my poor stock selection VAS has never been more than 5% of the portfolio but is still my largest ETF holding

i haven't spent a lot of time watching 'top 200' ETFs because they did not fit my plan , in the event of a major market dip i would be looking hard at VLC or ILC as my portfolio is tilted heavily towards mid cap and small cap stocks , i needed to FORCE growth between 2011 and 2020 and am currently reassessing the playing field ,

i have veered heavily towards small ( and mid ) caps that pay regular ividends ( some of which are DRPed ) mainly because i was busy on focusing on .

also sometimes holding those stocks when they are in the top 300 but still not 200 , is the best performance when looking at div. returns , your $1 share doesn't normally start paying ten times the div. when the share price hits $10 ( or even $15 )

i am quite capable of selecting 'blue chip' stocks when they seem to fit my plan

A. future income ( and franking credits )
B. future resistance to inflation

my top 5 holdings at the beginning of this month

1. APE ( at some cash risk ) ( average SP $2.90 )

2. MQG. ( 'free-carried ) ( average SP $26.76 )

CASH (less than $400 behind )

3. BHP ( some profit taken ) ( average SP $28.96 )

4. WES ( at full cash risk ) ( average SP $36.84 )

5. PME ( 'free-carried ) ( average SP 16.5 cents )

some stocks will be added to in the dip when the dip is big enough ( BHP and WES for example ) , but others will probably never go back to my prices again without a disastrous reason

PME divs in recent years ( i have held it since late 2011 )

DIVIDEND TYPE DIVIDEND AMOUNT ($) FRANKED EX-DIV DATE PAY DATE
Interim 0.070 100.00% 04/03/2021 19/03/2021
Final 0.060 100.00% 10/09/2020 02/10/2020
Interim 0.060 100.00% 05/03/2020 20/03/2020
Final 0.045 100.00% 12/09/2019 04/10/2019
Final 0.025 100.00% 12/03/2019 17/05/2019
Interim 0.035 100.00% 07/03/2019 22/03/2019
Final 0.035 100.00% 06/09/2018 27/09/2018
Interim 0.025 100.00% 08/03/2018 23/03/2018
Final 0.025 100.00% 07/09/2017 28/09/2017
Interim 0.015 0.00% 09/03/2017 24/03/2017
Final 0.015 0.00% 08/09/2016 29/09/2016

please tell me about 10 year bond yields again , i seem to be missing something in the fascination ( maybe it is the bias of mine against leveraging heavily on my investments )

MQG div. yields in recent years ( i have held MQG since the middle of 2011 )

DIVIDEND TYPE DIVIDEND AMOUNT ($) FRANKED EX-DIV DATE PAY DATE
Interim 1.350 40.00% 16/11/2020 22/12/2020
Final 1.800 40.00% 18/05/2020 03/07/2020
Interim 2.500 40.00% 11/11/2019 18/12/2019
Final 3.600 45.00% 13/05/2019 03/07/2019
Interim 2.150 45.00% 12/11/2018 18/12/2018
Final 3.200 45.00% 14/05/2018 03/07/2018
Interim 2.050 45.00% 07/11/2017 13/12/2017
Final 2.800 45.00% 16/05/2017 03/07/2017
Interim 1.900 45.00% 08/11/2016 14/12/2016
Final 2.400 40.00% 17/05/2016 04/07/2016
Interim 1.600 40.00% 09/11/2015 16/12/2015

this little exercise also downplays the spin-off factor , while i have held these five stocks

WES spun-off COL , MQG divested SYD , and BHP spun-off S32 , not a bad set of chocolate sprinkles

now VAS or even VHY didn't reflect those little gems properly in their performance gains

however some can make much better profits earning a salary ( instead of hours of research and thinking ) and good for them .

i guess it all comes down to time availability of each investor

cheers

 

First you state the above.

In response to the above you reply.

Followed by what is incomprehensible to me but nevertheless two different rationale on the same holding in the same day.

Gibberish.

 

VAS/A200/IOZ/STW are all basically the same long term with the main difference being fees.

With the bottom 100 around 3% of the ASX300, differences in returns are minimal and any growing small caps will be captured by the other funds as soon as they enter the ASX200

I Need A Weapon – The great A200/IOZ/VAS debate

 

BUT lets take BKL would you have liked to buy it at $22 or the price it climbed to when included in the XJO , so yes that is maybe only 2% of the total market but how does that go with gains , it might be tiny advantage but these are tough times and a term deposit is paying so little , so that extra gain is magnified in comparison

also note which stocks were NOT in the top 200 in say 2016

no APE , no PME , no APT , no APX no S32 , no COL i am sure other members can add several more , now not of of these for top 300 stocks first , but you get the picture the top 200 ( or top 300 ) are not a fixed goalpost

i recall a prominent You-Tube personality that likes to keep about 10% in speculative assets ( speculative meaning the $value is highly likely to go UP )

so a 2% bet on massive winners is not unreasonable for a novice ( imo )

but also consider failing 'blue chips ' are given a tiny last chance to recover before being purged from the fund ( not that i consider that a good thing )

 

Total returns of ASX200 vs ASX300 since 2000. ASX200 ahead by 0.04% p.a. (Basically nothing).

Pick one and move on to other more useful things

 

but i will try hard for that extra tiny edge , now if i was a billionaire the difference would not be worth the effort , but since i MIGHT barely qualify as middle class , that extra effort might be pivotal , remember history strongly suggests inflation will kick in ( inflation meaning an erosion of spending power ) , i reckon i will need all the warchest i can accumulate

 

but they basically had no impact on returns as the total of these 100 companies is about 3% of VAS.

A 0.03% allocation on the next Afterpay isn’t going to move the dial

 

Um, I admire and highly respect your worthwhile attempts but I fear it is a waste of effort.

Keep at it if you wish but considering the situation I have determined what is the most appropriate future approach to some posts.

 

maybe it will when official interest rates are 0.1%

would you rather a 0.3% chance at the next APT or a 2% chance AMP will regain former glories ( or AGL or ORG for that matter )

since VAS is less than 5% of my holding yes i will take that tiny chance .
BTW i totally ignored APT in it's rise upwards my exposure is totally via ETFs and LICs , i would rather have direct interests in DTL , HSN , and TNE , although i did have a massive result with ISX

 

i thought the point of this whole debate was to inspire thought in newer investors , i am quite aware in investing 'one size does NOT fit all'

if an investor feels like exploring further out of the risk curve , we should help them assess risks v. rewards v. their investing aims

if i was starting my investing adventure say 20 years earlier ( than 2010 ) i would probably have a different approach , to attain a different aim , for instance i might have bought a commercial property or two and less shares ., on the way

if i suspect the winds of change are coming , i would be ready to change tack very quickly ( which is why cash is fairly high for me , currently )

 

VAS is a fine choice as is IOZ/A200/STW. If an investor has picked one, just stick with it. There is close to zero value in converting from one to the other and zero chance one is going to materially outperform another.

For every APT that rockets up the ASX 300, there are going to be many more companies that drop out of the index altogether

 

Agreed.

Now, what about another debate that I had with a colleague not long ago: VGS vs IOO. That is surely a different cattle of fish? The argument was that IOO is easy to invest via commsec pocket with $2 brokerage and chess sponsorship. But I said it's triple the cost and only has 100 holdings vs nearly 1500 of VGS. Positive skew and all that. Irrespective, couldn't convince them. Since then I'm trying hard not to pretend to be a guru (which I'm not anyway).

 

thanks for the link , i hadn't seen that site before

the differential factor for me when choosing VAS ( A200 wasn't available then but STW was )

was VAS did cover those extra 100 shares even though at trivial amounts and it tracks them EARLY ( whether that is good or bad )

so went for diversity via VAS and higher div. returns via VHY , remember i don't like to depend on just one fund to do everything well ( all the time )

and yes i realize fees are VERY important to other folk ( especially those that are looking 30 years ahead )

cheers

fees on funds that regularly produce the goods are less important than fees alone if a fund ( or LIC ) starts an under-performance trend i can always exit crystallizing a profit ( like i did with SLF and IEM )

 

I tend to agree that IOO is too concentrated and given it also has a higher MER, I prefer VGS.

10y (28 Feb 2021) returns have been about the same. 12.7% for VGS vs 12.6% for IOO

 

yes very true but buying stocks in the ASX300 is very much a shotgun style of hunting you can pick two or three tempting stocks and get a useful holding compared to a 'blue-chip ' stock

one very lucky pick can offset 10 dud picks ( or even more ) look at ''lucky pick ' NST @ 87c a share that will offset at least 3 other bad picks in the small cap end of town

just one stock/fund manager .. NOT ME , i have my bad days , i expect a fund manager under pressure to have some as well ( and some inspired moves )

and SOMETIMES swapping horses ( at the right moment ) is the right thing to do as well , but of course you need the eyes ON the game and calculator ready ( to make sure your eyes aren't fooling you )

now i have NOT sold down VAS or VHY , but instead noticed other interesting opportunities when it came time to park EXTRA cash , SYI on the other hand has been volatile enough to tempt me to buy , reduce and then add extras later , while IHD i add at opportune moments

now sure if i had a Vanguard account ( but i don't ) i might be more tempted to stay with various Vanguard offerings but NOT stick with just one investment .

VAS has been good to me to be sure , but not to the extent i will ignore other opportunities