Vanguard Index managed funds vs Index ETFs (2023 Update)
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- Опубликовано: 29 июл 2023
- Vanguard Index managed funds vs Index ETFs, which should you choose? This is the updated video of my Vanguard index managed fund vs Index fund that I made two years ago. This time, I used a longer investing horizon (5 years) to compare the price return of two pairs of popular index funds VAS & VGS with their managed funds to see which one provided a better return.
Check the previous comparison video: • Vanguard Managed Funds...
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Which platform do you use to invest the two index funds? 👉 Check the previous comparison video: ruclips.net/video/V01aSuD75v4/видео.html
I use the managed funds because they are much bigger in FUM than their equivalent ETFs
Additionally. Leaving out the dividend is problematic. The managed fund pays a slightly higher dividend than the ETF. Looking at total return is the only true measure
Agreed with the total return approach!
Can you please make video on VGS vs BGBL
I certainly can :)
Hi Irene,
thank you so much for posting this informative video. I am 19 and very new to investing, I have created an account with Vanguard and consolidated my super to their platform as well. I have been slightly overwhelmed by the complex nature of investing; and the plethora of options, whether it be ETFs or Indexed MFs, in terms of developing a long-term investment strategy what would you recommend to a young person fairly new to this area? Should I target high-yield ETFs or a more lifecycle-based strategy? :)
Hello~ I'm very glad a young investor stopped by my channel and watched my content. If I were you at your age (46+ years investment horizon until retirement), I wouldn't mind to allocate more growth assets (shares either in ETFs or quality individual shares) than defensive assets (bonds, cash). As you mentioned high-yield ETFs, just be mindful on the total returns as you don't want to buy the ETFs that have the high yields (dividends) on the price of lower capital gains. You can use Lifecycle as your core portfolio (for your age, probably 90% growth/10% defensive), you can add some broad market share ETFs (there are popular combos, which I'm planning a video about it) or quality individual shares as its satellites. I'm really impressed that you started investing at such a young age, you are already ahead of most of the people in the country. Keep learning and your future self can't thank you enough!
I will prefer A200 and BGBL betashare Lower fees
Great video thank you, new subscriber here 👋, what are your thoughts on the Vanguard High Growth Index Fund VAN0111AU? And would you add it to a VGS/VAS/VHY combo portfolio? Thanks!
Hey Eddie, thanks for your time to watch! VAN0111AU is already a ready-made diversified fund that consists of VAN0002AU, VAN0003AU and bond funds. I wouldn't add to VGS/VAS/VHY as they are overlapping. You may want to buy more VGS/VAS to balance the weights depending on your risk tolerance. VHY to me is a thematic ETF for income, speaking of which, my next video is about 7+3 high-yield ETFs :)
Would you say it’s better to move the index fund sell it and move it all to etf equivalent?
I have quite a few holdings in the index managed funds, had a similar thought as yours, but I'll just leave them for now considering the CGT.
Can you explain the fees to me a bit more? Because with ETF you buy them for the exact price that trading day and don't have a buy/sell spread of 0.08%/0.08%. With ETF you have a $0 fee for buys and a flat $9 fee for selling regardless of the amount. Also the ETFs have a lower management fee for the same index fund. Over time you save more on fees in the ETF vs Index fund. However at the same time you can not buy fraction shares of an ETF so you are missing out on the time in the market until your vanguard cash account has enough to buy another whole ETF. Could you explain to me how you calculate your fees and/or possibly do a video explaining if the time in the market vs waiting for another whole ETF actually outperforms the difference in fees or not. I currently have both VGS/VAS in both index fund and ETF forms. My index fund has fraction shares where as my ETFs has residual cash in the account until i can buy more next pay check. Thanks if you can help answer this.
My thought process here is that ETFs are better if you are like me and make consistent investments fortnightly as I don't have a buy fee and pay the NAV that trading day vs buy a spread of 0.08% of the NAV for index funds. Also it's long term so I will sell it as one big lump sum when needed to buy my first home. Therefore I will have a one off fee of $9 and sell it at the NAV again instead of a 0.08% sell spread in index form
When using Vanguards' own fee calculator for my personal amount, I invested. It was only a difference of a couple of thousand in fees, though comparing them for a $3,500,000 balance. So in this case I feel like time in the market with fractional shares way out performs the difference in fees. I also took into account difference in management fees, buy/sell spread, one off brokerage fee in ETF vs $0 for index fund, Difference in returns over a long period of time. However, there is no way of putting whether you can use all my investment a fortnight in the ETF. It just assumed the whole balance is invested with no residual. Do you know if it makes a big difference?
I guess over time, if I have $300 and I'm buying 2 ETF for $275 with $25 in residual, it won't make that much of a difference to wait 14 days for the next purchase. However, this is affecting my dollar cost average by waiting, whether it be worse or better. I'm also not getting market returns on my $25 for 14 days, then the next 14 days and the next 14 days, and so on. Over 30 years that could make a difference. Just wanted to know your thoughts
Hi Christian, The index-managed fund doesn't 'WAIT' until it has enough funds to buy the 'WHOLE ETF'. It is a pool of funds from all investors that buys the underlying assets (not fractional shares) and is open for sale as units. Typically, the fund issues more units as it grows. In terms of fees, the management fees from both managed funds (higher) and ETFs are from the fund level, meaning the fund manager will deduct the fees from the pool of money - this will be reflected in the returns. From the personal investor's level, investors pay the buy/sell spread based on the managed fund's NAV on the trading day; there is a brokerage fee depending on different brokers. There is a bit of 'Time the market' opportunity:" Your actual buying/selling price of an ETF has good value compared to the market price of the ETF that fluctuates during that trading day. Hope I explained it well.
@IreneZhu Yes, I completely agree with you. I use Vanguard as my broker. With the VAS index fund form, you can buy fractional units, and there is no wait. However, I'm looking at buying the ETF of the VAS index fund, which can only be bought in whole units. The index fund has a management fee of 0.16% p.a, whereas the ETF form has a management fee of 0.06% p.a!!! Also, the average return is 7.82% p.a for the index and 7.88% p.a for the ETF form of the same index. I'm just wondering if the lower fees and higher returns of the ETF form would outperform the index form in the long run? Because with ETF form, there is a wait as you need to buy whole units at a time and can't buy partials. This means I need to wait until I have enough money for a whole new unit. I hope this makes sense.