Managed Funds Vanguard

I've been warning for some time this is all part of the Bogleheads plan for world domination:

 

@austing

Humans Down Under Face Final Showdown With Passive-Fund Invaders

One of the world’s last havens for fund managers is coming under siege.

In Australia’s A$2.8 trillion ($2.1 trillion) fund industry, managers who rely on human judgment to pick investments have so far withstood the global onslaught of passive offerings. They’ve done so in part by cutting fees below those in other large markets. The billions flowing in from the nation’s pension system have helped, too.

It may not be enough. Giants like BlackRock Inc. and Vanguard Group Inc., encouraged by the past years’ global shift towards passive investments, are homing in on Australia with commissions active managers can’t hope to match. And as beating benchmarks becomes harder, the industry is discovering that pension funds’ largesse has its limits.

 

We, Dividend Investors Anonymous stand united and shall:

 

Vanguartd have now been in Aus 20 years

In June 1997 they launched the Vanguard International Shares Index Fund (VISIF) and the Vanguard Australian Fixed Interest Index Fund (VAFIF), with the Vanguard Australian Shares Index Fund (VASIF) following three weeks later.

At the time, the three index funds combined provided access to more than 1890 securities in Australia and overseas, with management expense ratios starting at 0.28 per cent p.a.

Fast forward 20 years and management expense ratios have fallen to as low as 0.18 per cent, illustrating our commitment to lowering the cost of investing and helping investors to keep more of their returns…

 

Vanguard Active Management: sounds like an oxymoron to me.

 

Vanguard has always offered the full suite of active and indexed products, with lots of factor/tilt options in the states. What all have in common is low fees and investor ownership (US funds).

 

Thanks to dividend reinvestment have now reached about $120,000 in the retail version of the Vanguard Australian shares fund. Am I able to convert that to the wholesale fund without incurring some sort of transaction costs or triggering some tax event?

 

I believe you have to take a cgt hit. The earlier the better. You could wait for a market fall but you may need to wait a while.

 

i like your avatars @ErYan and @austing

 

At least the fees in the retail fund are staged, not a flat fee. 0.35% on the balance over $100k.

 

Changes to taxation etc of Vanguard ETFs / Funds (excellent news):

ASX - Request Rejected

Found this elsewhere:

https://lifefocuseofy.com.au/media/60945/amit_adviser_faqs_asgard_final.pdf

 

The Attribution scheme will be a bit of a game changer for the unlisted funds that take part. Removes a huge drawback.

 

You bet. I tended to favour STW over VAS because VAS was just a class of units overlaying the "unlisted" wholesale fund. But now with Vanguard opting in with AMIT from 1 July 2017 VAS for me is the favourite with the CGT issue pretty much removed. Of course VAS's fee is lower and will likely stay lower than STWs. And despite VAS having quite a bit less FUM than STW (but reducing the gap) the spread difference between these is minimal. Importantly as for survivorship I feel far more confident in Vanguard product being around in the very long term.

So come time to reintroduce a cap weighted Index ETF back into our portfolio I've now decided it will be VAS.

 

CG attribution + Fees are the two killers for the majority of unlisted products. AMIT will to my mind, make a some of the unlisted small cap products more attractive to the market...if they get on board that is.

 

Sure will. However With Disc Trusts, Coys and SMSFs the paperwork associated with investing in unlisted funds is usually a pain. mFund removes that issue but to date there is a limited but improving number of Mgrs joining mFund. From memory I think IML have avoided mFunds to date. Need to check if IML have opted in with AMIT.

I personally will stay with listed products.

 

Just checked. IML has chosen to opt in with AMIT from 1 July 2017.

http://www.iml.com.au/files/2017-05/Notice_of_AMIT_Changes_2017.pdf

 

Just thinking, given AMIT does this now make VGS a little more attractive than previously when comparing it to US Domiciled VTS / VEU?

 

Referring to Austing's quoted post above

What is the additional paperwork for purchasing an unlisted fund through a Discretionary Trust?

I am starting to feel that owning a Vanguard fund like their High Growth fund through a Trust may have it's merits.

One thought is nagging to be answered though is (i) if the managed fund is a trust itself (Vanguard?) then you have the situation of a Trust Distributing to a Family Discretionary Trust. (ii) Could it be advantageous in the sense that if you requested Vanguard to DRP the distributions would this now NOT be a taxable event through the Family Discretionary Trust as would be the case with a DRP using just VAS itself?

 

For those interested in the Vanguard wholesale funds I saw this elsewhere:

The Vanguard rep that I spoke to said that if you wanted to contribute to a new wholesale fund then there is a $5k initial requirement, however after that you can send a minimum of $100 to that fund.