My Australian ETFs, Stockbroker, and ETF Information Websites (October 2019)

My Australian ETFs, Stockbroker, and ETF Information Websites (October 2019)


Hi guys. As requested, I will give you an update of
my current ETF portfolio as well as which stockbroker I use, and where to get vital
ETF information. ETFs are great for passive investors who aren’t
interested in picking individual stocks and want a low-cost, relatively low-risk way to
invest in the share market. So let’s jump straight into it. My current portfolio is 35% VAS and 65% VGS. Although not very interesting or unique, it’s
taken me almost two years to settle on this allocation. I think it’s a good mix of international
and Australian securities at a low management cost. Later, I will also talk about why I modified
my portfolio from VESG (Vanguard’s ethical fund) to VGS. VAS is Vanguard’s low-cost Australian Shares
Index ETF with a management fee of 0.10%. It seeks to track the return of the S&P/ASX
300 Index, that is, the top 300 Australian companies listed on the ASX. It’s an index fund in that it’s not actively
managed (that is, there is no portfolio manager tying to actively pick stocks or time the
market, hence, the low fees). It is domiciled in Australia and has quarterly
distributions. It provides good dividend income (I’ll talk
about this later), and franking credits. Franking credits simply mean that double taxation
is reduced or eliminated for your dividend payments, which may result in you paying less
income tax or getting a bigger tax refund as I can attest to. The top 10 holdings include all the major
banks, plus CSL, BHP, Woolworths, Wesfarmers, Telstra, and Macquarie Group. If you look at the 1 month performance of
VAS, you can see that there was a rather steep decline last week. However, ETF investment should not be about
the short-term. If you invest in the share market, you have
to expect these short-term fluctuations. Looking at the year-to-date chart, we can
see that the growth looks a lot more healthy. VGS is Vanguard’s International Shares ETF
with a management fee of 0.18%. It seeks to track the return of the MSCI World
ex-Australia (with net dividends reinvested) in Australian dollars Index. This includes over 1500 of the world’s biggest
companies. It’s also an index fund which is domiciled
in Australia, and also offers quarterly distributions. It should be noted that the fund is exposed
to the fluctuating values of foreign currencies, as there is no hedging to the Australian dollar. Major holdings include Microsoft, Apple, Amazon,
Facebook, Google, Nestle, etc. In terms of recent performance, again, if
we just look at the past month, then it doesn’t look so good. But ETFs are a buy-and-hold investment and
should be treated as such. The year-to-date chart paints a much rosier
picture. If you’d like to compare ETFs and find out
all their vital statistics, ETF Watch is a good website to use (Note: they do not sponsor
me in any way). They show things like latest volume, market
cap, and dividend yield. As you can see here for VAS, the dividend
yield is quite high at 4.48%. If you like dividends, certainly, VAS is a
good option. Now onto why I ditched VESG in favour of VGS. Essentially, they’re the same fund in that
they both have the same management fees and have very similar holdings. If you look at their charts side-by-side,
it becomes a game of Spot-the-Difference. They’re essentially the same. But the biggest difference is that VESG, Vanguard’s
Ethically Conscious International Shares Index ETF, does not contain companies that focus
on Non-renewable Energy, Vice Products and Weapons. What effect does this have on returns? This. The dividend yield. VGS has a significantly higher dividend yield
at 2.69% compared to VESG’s 0.42%. Now that’s significant, and that’s the
only reason I swapped out all of my VESG for VGS. You could argue about the ethics of it all,
but personally, I don’t think Facebook, Microsoft and Coca-cola are any more ethical
than say Exxon Mobil. You could debate about it, but ultimately,
businesses are in it to make money. Every big company participates in ethically
questionable behaviour. If you don’t like it, then probably the
best thing to do is to not invest in the stock market at all. There are very few companies which you could
honestly call 100% ethical. But ultimately, in my opinion, companies are
getting better at doing the right thing. They’re not perfect, but they are getting
better on average. Now onto which stockbroker I use. SelfWealth are Australia’s cheapest online
broker who offer a flat-fee brokerage of $9.50. (Note: they also do not sponsor me in any
way). If you buy or sell ETFs in say $5,000 parcels
(which is what I would recommend), then you will significantly minimise your fees. $9.50 is less than 0.2% of $5000. It’s a very minimal upfront cost. Along with the low management fees associated
with ETF ownership, SelfWealth is a great way for the casual investor to start investing
in the share market. SelfWeatlh have received generally favourable
reviews. I can attest to this. They treat their customers very well and have
an easy-to-use interface. I’ve never had any major issues with them,
and they’ve always been quick to help me out when I need assistance. Anyway, that’s my current portfolio. 35% VAS; 65% VGS. It’s simple. It’s diversified. It covers most of the world’s biggest companies. If you’re a passive investor like me who
knows little about individual stocks (and doesn’t want to spend the time researching
that information), then ETFs are a great way to invest your hard-earned money. Thanks for watching.

Author:

14 thoughts on “My Australian ETFs, Stockbroker, and ETF Information Websites (October 2019)”

  • Wow that was quick! Thanks for listening to your subscribers! Is there a reason why you chose VAS instead of A200, considering the have lower mgmt fee?

  • Ok, I watched the entire video, and am absolutely disheartened that you endorse weapons manufacturing, coal mining and animal husbandry – especially considering the state that our world is currently in and is predicted to be heading. Rising temperatures, loss of biodiversity and habitat, all for what? Your 2% extra coin?

    You'll need to be thoughtful about what you rant about in future, considering that you've just made your own bed.

  • INVEST for the future says:

    Great to see you have avoided Managed Funds who have a history of charging excessively high fees to actively manage your money and underperform the ETFs that you have chosen to invest in. Oh, and by the way, if they do happen to outperform the market (highly unlikely) they want a chunk of that as well. I like researching companies and manage my own investments but for those unable to spend the necessary time or lacking confidence, these two ETFs are excellent choices.

  • Great, good update. As a noob and lazy investor, I went with VDHG. Set and forgot, rinse and repeat. Hold for 30 years. Thanks.

  • homebrandrules says:

    good vid, thanks mate, would u consider buying yen, in expectation of a crash?
    keeping in mind what happened to the aud/jpy pairing at the time of the GFC?
    also in anticipation of a crash would you hold a cash reserve?

  • If you invest in ETFs you are an idiot! When the SHTF will lose everything! Just get out! You get a big fat -1 my friend!

  • qualityposts2011 says:

    Great short videos.
    My 2 cents: I have been concentrating on EX20 – Betashares top 200 ASX shares EXCLUDING the top 20 stocks. Hence Excluding the most of the big banks. https://www.betashares.com.au/fund/portfolio-diversifier-etf/
    Lets compare EX20 with VAS
    EX20: 175 companies ; Financials=11% ; 4.8% yield ; expense ratio:0.25%
    VAS: 275 companies ; financials = 32%! ; 4.5% yield ; 0.1% exp ratio

    In this environment one does not want to be overweight with banks; hence EX20 being a better option moving forward.

    Secondly get into QRE. This ETF covers the large Australian commodity companies : 35% BHP ; 11% RIO ; 11% Woodside

    So having your Australian share of the portfolio 70%EX20 and 30%QRE is my recommendation.
    https://www.betashares.com.au/fund/resources-sector-etf-betashares/

    As for overseas companies ETF: take a look at CORE

  • Holy shit, was VESG's dividend always that low? I thought it was higher, I should of bought VGS instead

    On the vanguard's website it has the dividend yield as 2.26%? https://www.vanguardinvestments.com.au/retail/ret/investments/product.html#/fundDetail/etf/portId=8225/?overview

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