ETF Vanguard vs. Fidelity

Hi all, hope you are keeping well and safe!

I am looking to invest part of my portfolio in the below Fidelity indexes rather than their Vanguard equivalent:

• Fidelity MSCI Health care Index (FHLC) vs. VHT - 10%
• Fidelity MSCI Consumer Staples Index ETF (FSTA) vs. VCR -10%
• Fidelity MSCI Utilities Index (FUTY) vs. VPU - 3%
• Fidelity MSCI Industrials Index ETF (FIDU) vs. VIS - 2%
• Fidelity MSCI Consumer Discretionary Index ETF (FDIS) vs. VCR - 5%

Doing this for the below reason:
1. MER with Fidelity of 0.08 vs. Vanguard of 0.10. Small difference, but to me it counts.
2. Price of the share is higher for Vanguard indexes but lower for the Fidelity equivalent. I dont quite understand this one as if they are both tracking similar index (ratios of the companies and no of companies have small differences from what i could tell), then shouldnt they be similar price marks?

I understand that Vanguard has been there longer but from a percentage returns perspective, I think Fidelity indexes would be better. Just looking for other peoples' opinion on why I might not be making the right choice?

Thanks for any insight you can provide.

 

So you are investing directly into US based ETF's not Australian ETF's - using stake or similar?

 

I just opened my account with Commsec International. Waiting for Selfwealth to launch their international share trading platform in Oct and will then move there as its lower cost.

But this is going to be roughly 30% of the portfolio the rest is going to be in:

1. A200 Betashares - 20% excluding direct shares i hold too.
2. iShares S&P 500 ETF (IVV) - 15%
3. Vanguard All-World ex-U.S. Shares Index ETF (VEU) - 20%
4. Vanguard Ethically Conscious International Shares Index ETF (VESG) - 5%
5. Vanguard Growth ETF (VUG) - 10%

I know the total portfolio makes me very concentrated on US as a region.

 

I saw your names and input into many of the share discussions and they really resonated with me.. so hope you dont mind me taagging you @The Falcon @Nodrog @Redwing @dunno @oracle @Fargo
Really appreciate if you have any thoughts on the above Apologies if i missed out other people, i have a lot to still read and absorb.

 

1. The difference is miniscule. Even then, the international brokerage and FOREX costs far outweigh any benefit. SelfWealth will charge you $9.50 USD per trade and 0.60% on transfer to their account. You'd be better off with Australian ETFs.
2. You're buying a share of a fund, which can come in various sizes. Buying 1 piece of a pizza cut into 4 pieces is the same as buying 2 pieces of a pizza cut into 8. Buying 1x $100 share of a Vanguard fund is the same as buying 2x $50 shares of a Fidelity fund

What benefit do you see in investing in those ETFs?

 

Commsec charges yearly fees on international stockbroking account.

 

The hardest thing for me to learn over decades of investing has been that “less is more”! Don’t sweat the small stuff, 80 / 20 will get the job done nicely especially in Australia where we don’t have a desirable low fee All World (ex Aus) equities ETF. Optimal is not worth it if complexity, fees, domicile issues, mental distraction not to mention admin (nuisance AMIT etc) outweigh the benefits.

VAS, VGS and VGAD (if high Global exposure relative to AUS) are the Major Core. Given the 80 / 20 principle works well here do what you want with the 20% such as EM / Asia / global small caps. But importantly remember it’s the 80% that vastly determines the final outcome!

 

Thank you @mtat
1. I was not focusing on that aspect, thanks for pointing that and something quite key to consider. I wasnt aware of the .60% transfer cost either :| So another aspect to consider would be, what other platforms are available which are perhaps better than Commsec International (Thank you @Zenith Chaos, another thing i didnt quite check! :|) and Selfwealth when its finally there. @DoggaPP how is your experience with Stake?
2. Ah, so glad I posted here, That's so right! So what we are saying is Fidelity tracks a smaller "portion" of the market and hence the price, but in real terms, they are the same interms of price representation.

The benefit I saw was further diversification that also focuses on what I felt were some key sectors. My thoughts are: Health, Utilities and Consumer staples would be the "anchoring" sectors for consistent returns, Tech & communication (I found VUG fit nicely there due to its weightings on both)as a sector that will continue to grow so holds a potential upside, Consumer discretionary and Industrial were more the "buy now while they are likely to go down due to recession and hold till economy revives". Also on checking on PortfolioAnalyser (Backtest Portfolio Asset Allocation) adding in these sectors offered a better percentage return "historically", which i understand is not a gurantee for what will happen in the future, but fed into this thinking.

But the link you shared on another thread (The 2019 S&P 500 Sector Quilt) has been quite eye opening. On one hand, it helps me recognize that I don't know for sure which sectors would be stable or outperform or underperform the market, on the other hand looking at the S&P 500 index performance across the different years in that link as well has also somewhat re-enforced the value of sector based investing. So now I am not quite clear what to do Need to reboot.

 

I would echo the sentiment of simplicity being your friend. An Australian domiciled fund would work out easier, and I suspect cheaper and just as effective.

VAS and MVW are my Australian ETFs, VGS and VAE are my international ETFs. I used to have lots of different holdings but honestly, I think I do just as well now, with less headaches, and with just a few core ETFs I can actually see the value grow in a meaningful way.

Sticking to a simple plan of simple holdings is going end up with a better result than picking an exotic ETF in my opinion.

 

Thanks @Nodrog, the 80/20 is an interesting take on it. Every long term invester I have read seems to be aligned with keeping things simple, and noobs like me want to keep tinkering. I have to admit I have taken punts and currently hold CBA, WPL, SPT, CSL, PPH and Z1P as individual stocks but those I aim to get rid of eventually and put the money into the Core portfolio as and when I can take a profit: A200, IVV and VEU. VUG and other international ETF's I have not yet bought, and VESG is me wanting to do the right thing, albeit 10% of the time :/

 

I put all my cash in Vanguard.

 

Thanks @MB18 did you see any value in the multiple holdings when you had them? If you were to start over, would you keep it super simple from the get go? What percentages have you allocated to your ETFs?

 

Which one?

 

ASX 300. and reinvest the dividends.

 

At risk of being boring / repetitive the nirvana of investing enlightenment can be summarised as:

PS: Personally I still like a well chosen LIC or two but not at any cost.

 

Haha this was great! I am somewhere between Finds indexing enlightenment and Overcomplicates everything!

Thanks for sharing!

 

I hope you’re a quicker learner than me. Bloody embarrassing how slow I’ve been to not just learn this stuff BUT take control of my psychological weaknesses and implement it! It’s a lot harder than it seems especially with my obsessive nature. But rest assured despite mistakes and with perserverence you will get there and be far better off than the vast majority of the population when it comes to that all important time of having to live off one’s own investments.

 

I didnt see any real value in multiple etf holdings. Some were very small funds with little liquidity and having money spread far and wide meant I never really saw the balances grow in any great way.
Other individual stock holdings did well but I think that was mostly due to luck so I started to sell down to just a few etfs and kept a few of the bigger success stories as individual holdings.

ETF wise I now have roughly 60% australian (split evenly between VAS and MVW) 30% VGS and 10% VAE.

If I had my time again I wouldnt bother picking individual shares, and I'd probably just put everything in VDHG and call it a day.

 

Thanks for that @Nodrog. I was obsessively tracking finances, reading investment strategies etc. up until about 12 months ago. Before that, it was a decade of reading Somersoft/PC, investment books and forums of every sort. For the last few months, I have begun to realise that mastery over life is the most important ingredient in leading a satisfying and contented life. I still read copious amounts of FIRE material but it is mostly about the more esoteric aspects of FIRE such as living a more natural life, finding purpose, self-improvement, self-awareness etc. Optimising investing finances to the absolute hilt does not cut it for me anymore. In fact, my biggest focus is one that I have the most control over – a high saving rate. Apart from that, I just invest in the one index for now and keep at it till I feel I have enough.

It will be a long time between now and FIRE for me and I want to make sure that I utilise the time to develop myself and become the best version of myself.

 

Good on you, you’re well ahead of where I was at your age.