ETF Please school me on Betashares A200 Vs Vanguard VAS

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thanks for your response.

 

Thanks @LIDM. This difference maybe negligible when starting with a small amount as there is no large sum of monies involved from property sale or anything else. But I would think it can have an impact in grand scheme of things.

 

A good read below

If you spend more than 10 seconds on the subreddit for FIRE in Australia you will see some sort of discussion on the merits of investing in A200 or IOZ or VAS, focussing in particular on the fees. The current MERs for these are 0.07%, 0.09% and 0.10% which doesn’t sound like a huge difference.

As regular readers of this blog would know, I’m a numbers kinda guy so I wanted to do the math to see what difference this would make over the long term.

Read on to see the results!

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

 

As always the bigger threat to wealth is inaction rather than quibbling over .05% MER.

 

Appreciate your kind thoughts @Pier1

 

https://aussiehifire.com/2020/01/18/i-need-a-weapon-the-great-a200-ioz-vas-debate/

 

The fire sub on reddit has a lot of A200 fanboys based on the lower MER. Not that I think it’s a big deal but what (I think) gets lost is the current income dilution per security of A200 with the lower FUM, as money comes in each quarter. This easily outweighs the minuscule MER difference until A200 grows to a comparable size. That’s my understanding anyone hopefully someone can confirm?

 

The dilution of income is offset by greater price appreciation.

@dunno explained this in the LIC thread a while back. I think the discussion at that stage was VAS vs STW
Listed Investment Companies (LICs) 2019 [LIC & LIT]
(Don’t know how to link a post so here’s the page, it’s not far from the top. Good learning experience for me at the time if you read the following posts)

 

It gets even murkier when you start looking at how well they track the index and account for securities lending which Vanguard do and brings in small buts of income.

Some index providers lag the index by more than their fee.

Last 3 yrs Vanguard total return after fee was just 0.05% below benchmark. So you could say net MER is actually less than 0.10%. I’d say that’s partly thanks to securities lending.

Investment Products

 

Does this mean someone in a higher tax bracket is better to invest with A200 right now as it produces a lower income but higher capital growth? By the time you retire and need the income, the fund will have have grown in size and be more stable.

 

Cheers for that