ETF Vanguard Global Value Equity Active ETF (VVLU)

Started investing somewhat more seriously around 1985 so as luck would have it got to experience the 87 crash. Still too stupid and lacking education to take much advantage of it but learnt that illiquidity (eg unlisted Property Trusts that froze redemptions) can be a good thing. That is, avoid selling out of fear. If you can’t sell (or pretend that you can’t) quality assets do recover.

Like all unpleasant events / phobias / fears etc I do believe the “exposure” experience (therapy) toughened me up to take better advantage of subsequent market upheavals such as discussed in previous posts.

Quite surprising for a sometimes glass half empty, fearful / nervy person in that now I look forward to market mayhem. Just goes to show that if even a fearful person like me can learn to cope with market volatility then just about anyone can. But I must admit learning to have a dividend vs capital / share price mentality helped a lot. Which no doubt to the annoyance of some is why I rave on so much about it.

Damn I discovered earlier how wonderful the combination of rum, pineapple juice and coconut water can taste. So given consumption of same I’ve likely drifted off topic.

 

Yes.

That said knowing that during market open ETF pricing can be all over the place I will sometimes submit a cheeky limit order and occasionally get it filled. Generally not worth messing around with for long term investors. I do these stupid things to entertain myself when nothing better to do.

 

I have been reminiscing in another post tonight @Nodrog. I too started investing in the 80's and we have seen a few highs and lows. Its good to look back sometimes to see where we have been because at times it was damn scary! Looking forwarded to another few big dipper rides on the market

 

@Nodrog & @dunno

I confess to placing market orders, usually after the market has run for a short period

Do Limit Orders Alter Inferences about Investor Performance and Behavior?

Dan Bortolotti (Canadian Couch Potato) says this though..

The Limits of Limit Orders

and

The ETF’s Price Is Right—Except When It’s Not

 

"A good rule of thumb is to set your limit a couple of cents above the ask when buying,"

This is what I now do.

If using a market order, Selfwealth uses a price about $2 above the current market price when calculating how many units in VAS I can buy with my funds. This always results in anything from a few hundred to a couple of thousand dollars being left over in my account because the market price had never moved $2 in the few seconds it takes me to place a trade. That really annoyed me. Now I set a limit order about 10 cents above the current ask price and I can calculate the exact number of VAS to use up just about every cent in the account.

 

Mmmmmmm fruitihol.

I'm hoping that I'm mentally prepared for a crash based on our conversations in this forum. It may be a bit like comparing sparring to a real boxing match. You don't really know how you'll react until you get punched in the face. Hopefully all I'll need to do is change over to brown underwear for awhile and stick to my never sell mantra, although I have to admit I'm extremely tempted to offload some dead wood at the moment. Low interest rates, high valuations, everyone driving Beamers and Mercs. We know how this will end. Prepare mentally and with a plan that you stick to no matter what.

 

@Zenith Chaos i have a “general” never sell policy. If something is truly dead wood or no longer fits my plan then I will happily chop it from the portfolio. I then redeploy the released capital to something else. Over the long term my plan has changed/refined. In the beginning direct shares were everything now we have less of those and more LICs and ETFs. ETFs were not even an option when we were first investing.

 

Nice video. Thanks @dunno.

 

How does VVLU compare to say WDMF? WDMF seems to say one of it's factors is value and has had a better retrospective performance

 

VVLU briefly reached a 1 year low today at $44.12.

 

From the highs in February VVLU has fallen ~15% while VGS only ~10%. Any theories on why value factor was hit harder? Recent falls appear to be based on hysteria rather than logic.

 

Bumping an old thread instead of starting new.

Why is there lack of love for VVLU? I don't see much on any forums nor blogs. I get this is not dividend stock nor the sexy growth sector which got boost with zero rate and forever QE ponzi scheme of global CBs. But with yields/rates all set to go higher, value style investing has done well during hiking cycle.

Buffet is also actively investing as he calls inflation's biggest risk is holding cash and he is god of Value investing.

I would invest in VTV (listed in US, so i shy away) equivalent if there was in Australia anytime. This VVLU comes close to it.

 

I suspect the combination of value being smashed the past decade and the low AUM in VVLU leading to concerns on its future.

Tide is turning with value doing better recently. AUM is now over $550m with $165m added in March alone
ASX funds statistics

Even dunno is getting in on the action Asset Allocation

I personally prefer a diversified approach targeting multiple factors (size, value, profitability, investment and momentum) via AVUV/AVDV/AVES which are US listed ETFs. Dimensional also now have some ETF options which look great, but VVLU is a pretty good alternative.

 

i didnt realoze ASX publish suchh handy report thx. last i checked earlier in year AUM was 300mio and i was surprised with growth of AUM to current 550mio.

i dont like US domicile fund - mainly due to estate tax issue (50pct). if i die in car crash, IRS can claim 50pct of my estate as death tax. Tax treatment of dividend is also not too favorable. That whatever tax form WEN 13? is fine with me, but death tax is key problem.

as to diversification i am simple guy - during low tide all boats sink. So i try to limit to 3 ETFs. VDHG is pretty good in itself but its component VGS is mainly US SPX, which is mainly Tech. (think of it as similar to ASX bank/material heavy, SPX is mainly Fanngs+) thus in order to compensate this tech bias during the time of interest rate hike cycle, i can try to improve diversification by something like this, effectively reduce SPX but keeping US exposure in value segment.

VDHG 45pct
VAS 40pct
VVLU 15pct

 

Understand your reservations about estate tax risks. Under current rules, as long as your W8BEN is up to date, it would only apply if you had over USD $11.7m in assets. Assets held in trust including superannuation avoid this issue.

Dividend tax is also the same @15% regardless of US domiciled or not as long as W8BEN is current. In fact US domiciled can be lower tax as they generally have a lower yield due to heartbeat trades. For non US assets held in US domicile there are lost level 1 withholding taxes though.

When you start adding tilts to VDHG you start to lose the simplicity of a single all in one fund. Rebalancing 3 vs 4 or 5 funds really isn’t any extra effort and more tax efficient than VDHG.

VDHG already contains 40% VAS. I personally wouldn’t be overweighting any more. VGS is already more diversified than say VTS or NDQ when it comes to tech. Diversifying into other factors like value is a great option if you can withstand potentially decades of underperformance as you never know when they will appear

 

thx @Hockey Monkey very informative.

- didnt know 11.6mio usd threshold, didnt investigate that far. either way my perception of holding US listed stock in custodian can be a hassel if i die thx clarifying estate tax. (or just do via super as you say)

- i "tilted" VDGH with VAS to enhance dividend income from VAS and franking benefit under wifes name, as well as adding VVLU to compensate on geography/strategy. but i see your point too, i have comparatively large property assets so ASX (bank shares) wud sink with housing bust

 

There is certainly legislative risk if US rules change and some more work for the executor in dealing with the IRS.

Adding VAS to VDHG is actually adding concentration rather than diversifying. An investor has to decide whether the franking credits are worth the concentration risk Franking credits – how much more are you really getting? — Passive Investing Australia

I too have a high concentration on property assets (like most on this forum I imagine), so limit VAS to 20% in our overall portfolio. There are reasonable arguments for anywhere between 0 and 40%

 

From my perspective it's a solid ETF. Better now that FUM have grown somewhat and management of it has been transferred to the US quant group. Its very potent in what its designed to do which makes talking about it somewhat tricky when you don't know other people's base level of understanding.

Buffet's version of value - ie buying sustainable cashflows for the long run, below their present value and Fama and French valuation factor is like chalk and cheese. Most of FF valuation factor return comes from migration of holdings out of the fund and scrapping a P/E expansion in the process, not from holding to realize the cash flows bought cheaply, as Buffett generally does.

The only real similarity of the strategies is that they are both more cash flow sensitive than discount rate sensitive - but they come at it from almost completely different angles.

The cash flow sensitivity is the diversification I seek against Market Cap which by design is price derived and hence discount rate sensitive. Incidentally I dislike most of the companies held in any FF valuation fund so its not a method I could ever implement directly. Hence I use a FF valuation fund for international cashflow sensitive diversification (often wonder if I should just buy Berkshire instead) and fundamental approach to get cash flow sensitive diversification in local direct shares.

If VTV was locally domiciled why would you prefer it over VVLU?

 

How did you find this out? Whether from one of your regular reading sites or a subscription service, would you mind letting me know which?

Also, since I missed it, where can I get info to read more about this change?

 

It was released as an ASX announcement.