Managed Funds Vanguard

Investing for growth is the right way for investing. I completely agree. It's the compounding that you are after. But that growth doesn't have to be 20%-30% YOY.

Nothing wrong in investing for growth of 5%-10% YOY with stable companies that have moats around them and have a long history of creating shareholder wealth. These are the companies that you can predict with high degree of certainty that they will be around 10-20 years from now and will be making more money into the future.

The best thing is you can pick them up at decent valuation because the market is only interested in growth companies growing at 30%-40%. The problem is then you have to pay a huge price for high growth companies and once growth slows they will be smashed. If you have followed Roger for many years you will notice a pattern with some of his picks where he chases high growth companies and then some of them turn out to be not worth paying such a high price. You just need one or two such companies and that will drag down your performance. But at the same time it can make your performance looks outstanding while the party is going on.

Cheers,
Oracle.

 

Changes to Vanguard wholesale divsersified funds asset allocation and price reduction:
https://api.vanguard.com/rs/gre/gls/stable/documents/10508/au

 

I see on overseas news a couple of days ago

Vanguard has announced another wave of fee reduction on selected funds within its US-listed ETF suite, following on from the firm’s last fee trimming announcement in February 2017. Included in the latest round of fee lowering are 13 equity ETFs and four bond ETFs

 

Thanks Property Lover! Very interesting! Seems like the big two for me are these:

 

The property exclusion I can understand because it duplicates mostly what's already in the main indexes.

Partially Hedged International I don't like because unhedged is our insurance should Australia go through a bad patch or off the rails due to populism etc eg Pauline Hanson becomes PM. Hedging also causes havoc with income distributions.

Essentially the changes seem to reflect the American view where it's all driven by asset allocation and when retired lifestyle is mostly funded by drawing down capital. Dividends are low in the US and there is no imputation ie double taxed. Hence dividend investing is not as popular there as here.

It exposes another risk, that of Vanguard periodically changing the asset allocation the investor chose when signing up. If you don't like it stiff bickies, you have no choice but to redeem units potentially incurring unecessary CGT.

Given reduced OZ exposure for a dividend focused investor it doesn't excite.

Could be useful as a core though with dividend fund satellites if wanting to boost income.

 

Vanguard’s approach to constructing Australian Diversified Funds
May 2017

https://static.vgcontent.info/crp/i...ersified-funds-whitepaper.pdf?20170510|101235

 

I have stated before I’m a fan of Vanguards wholesale lifestyle index funds (my wife certainly is). However the 100k minimum amount (down from 500k on request) can be out of many peoples reach. Another good index fund is the Bendigo Bank Index wholesale funds (Sandhurst trustees)

Minimum initial investment
$50,000
Minimum additional investment
$100 or a minimum of $50 per month via the regular savings plan
Management costs*
0.43% p.a.
Income distributions
Half yearly as at 30 June and 31 December and normally paid within 2 months

Not bad value!

 

Would this be actively managed v the passive Vanguard approach tho' ?

 

Admittedly it's difficult for some to scrape together the $100K for entry into Vandguard Wholesale funds. But it often amuses me that some here won't think twice about borrowing a million or a lot more to leverage into so called "safe" property but aren't willing to borrow a trivial amount in comparison ($100k) to gain the benefit of the low fee and added flexibility of wholesale index funds.

But of course this is understandable because shares are "risky" and property is safe:

 

HUH??

 

I can see the diversified funds are index funds i.e. a mix of investments mirroring the index, but the straight share funds are actively managed - aiming to outperform the index, from what I can see from their website? Or have I misread?

 

They offer both Indexed, and active products......the latter newly introduced in Oz. Have offered in the states for a long time.

 

I assumed Sandhurst Trustees / Bendigo bank were Australian.

 

They are just clipping the ticket on Vanguard product AFAIK so better off going direct if one is interested.

 

Yes I've been a Vanguard index investor for a while and don't plan on messing with the formula at my age. Just thought the Bendigo low entry point was interesting and good info from @unwillingwillis

 

Yes great info. But I agree with @Il Falco. Honestly if you can scrape together $100k (cash plus loan) it's far superior than the ticket clipper route.

There's a lot of flexibility with Vanguard wholesale product compared to Vanguard retail and perhaps those ticket clippers overlaying another level of fees providing only basic product.

Read the prospectus then give Vanguard a call. Their wholesale product offers a lot more than what is first apparent.

Not advice.

 

Quick calculation:

Vanguard High Growth Index Fund - Total Distributions in 2016: 9.5992 cents per unit.

At current unit price ($1.6356) that's a yield of 5.86% (24.5% franking). What's not to like?

 

A fair chunk of that is capital gain needing to be paid out due to fund outflows....so yeah, that funnily enough I looked at the annual report today.

 

Good report detailing the potential weakness of Vanguards ETF structure with units invested in it's Wholesales unlisted funds vs "stand alone" ETFs. A lot of investors are unaware of this issue with Vanguards ETFs. I stumbled upon it about 12 or more months ago on another forum where investors were complaining about an irregular large capital distribution. A couple of investors in the ETF rang Vanguard. From memory it was a result of a large redemption by an Insto in the underlying unlisted wholesale Australian Shares fund that flowed through to VAS?
http://s3.amazonaws.com/zanran_storage/www.vanguard.com.au/ContentPages/2473439191.pdf

From memory I think STW is a stand alone ETF as well as being much bigger and hence has less spread and is more liquid. It also provides some Mgr diversification rather than an investor holding all Vanguard ETFs.

Not advice.