An ideal VAS and VGS combination portfolio
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- Опубликовано: 21 июл 2024
- In this video I look at what a potential combination for a portfolio that just has VAS and VGS ETFs. Sign up to my weekly newsletter: sanjee.substack.com
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Timestamps:
0:00 - Intro
1:03 - What is VAS and VGS?
1:30 - What does the internet say?
2:02 - Plotting risk and return
2:42 - The graph
4:50 - Minimum risk combination
5:27 - Efficient combos
6:17 - What does this mean for you?
6:57 - Portfolio rebalancing
8:43 - Questions and requests
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Link to Efficient Frontier modelling:
• Graphing the efficient...
Useful links:
Australian Government website on personal finances: moneysmart.gov.au
Disclaimer:
The information provided in this video is general in nature only and does not constitute personal financial advice. You should also consider seeking the advice of an investment advisor who holds an Australian financial services (AFS) licence or is a representative of an AFS licensee. Be sure to work with someone who understands your investment objectives and tolerance for risk. Your investment advisor should understand these products, be able to explain whether or how they fit with your objectives, and be willing to monitor your investment alongside you. There are some Amazon Affiliate links above - if you purchase from there, at no additional cost to you, I will earn a small commission for each sale. 
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Thanks for a great video. Just getting into ETF's for super and general savings and these really help.
this was massively helpful. thank you for the video Sanjee
love your videos mate. For me personally, the calm delivery makes a huge difference over others who, although still helpful, present themselves as more of a loud tv personality. By contrast that can be a bit jarring when us newbies are trying to pay attention to the content. Anyways, keep it up!
Love this homie. He's like the cool chill homie at school that parties with you but also helps you with your hard math homework.
VTS / VAS combination would be useful. Thanks for making these videos
I instgram messaged Sanjee about this a little while ago and i couldn't have expected a better video. Keep growing this channel!
I’m a new subscriber and am loving your content. Thank you for your information ☺️
Thanks Kathy! Glad its helping.
Hi Sanjee, thanks for explaining everything in such an easy to understand way and making that jump into the world of investing less overwhelming! Just set up a joint investor fund with my partner who is American (now living in Australia) We want to invest in both VGS and VAS but are reluctant as we aren't sure what to do about the W-8BEN form? What usually happens if one person is a US citizen and we have a joint account? Hoping you might be able to help with an answer!
Great video, thanks.
Great video again
Would like to see in video with your other requests about over diversification. I have made a large list of ETFs that really makes safety in diversification. And of course we need to sleep at night when we invest.
60% International + 40% Domestic (ASX) is very similar to most EFT provider/ super fund High growth model portfolios minus the cash/bond/Reit/gold (10 to 15% allocated to International).
Most of the investment articles I've read suggest being invested for the long term sticking to a standard portfolio allocation beats investors always tweaking their portfolio to find the perfect allocations.
Great graph to highlight the return/stnd dev.
VDHG would be interesting to analyse, would love to hear your thoughts.
excellent information, thanks
Great video. Could you please explain how you (or Sam?) included distributions + franking to get monthly returns? Many thanks.
Hello Sanjee, thanks for the insightful video. I'm keen to know what are the tools/apps I could use to track the performance of my portfolio and what are the key parameters I should be looking at for a healthy portfolio.
great video man,,, VAS/VGS/VTS are great but would be good if you can do a video about pros and cons between VDHG and the 3 most popular vanguard..cheers F
love this! thanks Sanjee. Would love another video on how other ETFs could fit in like VAE, etc etc
(i.e. a 50% VGS, 40% VAS, 10% VAE is something i've seen thrown around.... ) Thanks!
Yes interested in this too I started with VGS and VAS but wanting to add another one but don’t know witch one
I constructed an efficient frontier curve of my own which I think is accurate as I also got 60/40 VAS/VGS. The optimal allocation I found with the least risk is 20/40/40 VAS/VGS/VAE, which has roughly the same returns as 60/40 VAS/VGS for significantly less risk.
To get higher returns for VAS/VGS/VAE, I also found 15/55/30 and 10/70/20 where compared to VAS/VGS, they had roughly the same returns for slightly less risk. These allocations does make sense as when you compare VAS and VAE on Vanguard, they have roughly the same returns but VAE has significantly less risk, even less than VGS.
Love this!
I have just started my investing journey with VAS and VGS as my foundation ETF investments, so I guess you could say this video is definitely for me :)
How’s it going 2 years latter I’m thinking about starting soon😊
Do you still follow the 60/40 rule
@@jamesrosher3623 I have 70% towards VGS. I am currently not very convinced with VAS: two years on -5% value, whereas VGS is the ETF that is keeping me in the positive (+7.8%). I will probably skew more towards VGS in the future while keeping VAS stock numbers as is
Hey Sanjee,
Wonderful professional video!
I've noticed with Vanguard that they are introducing a change in the Account Fees on the 18th of August. Do you know whether this would impact our decision to invest now or after the 18th of August?
Could you please do a combo between VAS, VGS, S&P200? Thank you so much this was a great video
This is a great video. I like the risk/return with standard deviation. Can you review this graph every year/few years pls..? As aussie etfs have only been around since 2014
If you compare VDHG to your graph timestamp [4:50 - 5.25] it works out very similar with approx. 36% VAS | 66% other Vanguard products incl VGS/VGAD aprox. 43% / 13% Bond/VAE.
Great info, subbed
Thoughts on niche ETFs like RBTZ? Worth having a small portion in a portfolio or just concentrating on 1 or 2 index ETFs like vas and vgs
According to Passive Investing Australia website having more than 30% allocation to Australian shares creates concentration risk. She gives an example that in 73/74 the UK sharemarket fell 73% ( while US market, by comparison, fell 45% in same period.) The UK sharemarket recovered in 10 years but it would be a big problem for a retired person if they had too much in one country and it lost 73%. This story also illustrates the importance of rebalancing.
Hey Sanjee, love your videos man they're really helpful. Could you consider doing a video exploring what to compliment VDHG as a core? Perhaps entertaining options for people that want to diversify into the Asian market or perhaps wanting to overweight US equities. Cheers bro
Will follow!
Pairing up VAS with VSO and VGS with VISM/VGE for a larger coverage of the world
Hi Sanjee, may I request you to do analysis on IXI ETF. It seems like a defensive ETF but has top global F&B industry leaders
you seem like such a nice bloke. Wish you every success
Thanks Hugo!
I understand that the vas is pegged lower than vgs purely on total returns but can we do an analysis based off franking credits? Vas (bring aus) comes with franking credits while vgs doesn’t. This considerably reduces the tax (even dividend income is taxed if in drp). I think this adds another 2% to return. I am suggesting not to have 100% Vas but the video ignores this so thought I’ll highlight it
Interesting, I had planned to do an initial 40-40-20 split with VAS, VGS and VAP, or at least 33-33-33 hadn't quite decided, we are only starting, and was going to have 50% in ETF's and then long term do 50% into single shares that I have faith in.
Did you?
Regarding your individual shares, have a look at the breakdown of companies and weighting for each in the index funds. You might see that the very companies you have strong conviction in are already heavily represented in the index funds. Good luck!
since VAS is only aussie stocks and the aussie market is like 2% of the global wealth, i would put 70% of my money in VGS and 30% VAS at most, but if i was looking at dividend income the most, i would put 70% VAS and 30% VGS, if you want more INCOME buy more VAS is you want more GROWTH and global exposure buy more VGS.
Was wondering, something that never seems to be mentioned is your overall exposure of your income and assets.
Should be looking at your total assets, not just your investment portfolio. For the "average" person -
Wages & property - 100% AUS
Super & managed fund likely 60-70% AUS
Shares (likely) 100% AUS
So 100% VGS would reduce your overall risk to the Aus market.
What do you think of VIOS and VTI? THANKS!
What if you don't intend to sell and focusing on dividends and tax concessions on franking? Wouldn't you be more VAS heavy? Have you factored in draw down?
What about a video on a combo of VDHG, VAS and VGS?
Good suggestion Arteon! I'll add it to the list.
@@SanjeeSen thanks!
@@SanjeeSen yes plz VDHG as well
What's your thoughts on factor model (leaning towards small + value) like in the U.S. they offer AVUV?
I'm a little more risky in having a VAS/VGS/NDQ split to try and hyper charge gains/losses in the current market...
Great vid, one question though: when you say a 50%/50% split for example, is this by units of each share or by current market value of each overall holdings?
Hi Brett, it’s by current market value of the holdings.
What if I have an investment property? Would the VAS exposure need to be lowered?
Hi Sanjee, your videos are great. I’ve got about 500000 sitting in cash at the moment from my super. I looking at VAS and VGE as an investment. If I do this as super what are my tax obligations as opposed to say sticking it in Hostplus?.
Outside of super: 70/30 - VGS/VAS
Inside of super: 58/28/7/7 - International/AUS/Bonds/Property Index (15% International is hedged)
I own $640k worth of property
Hi Sanjee, Love your videos. Could you please dive into superhero themes. They have very interesting themes like US Tech giants
Thanks for the suggestion Alex
VGS is composed of about 70% US Stocks but has significantly under performed the S&P 500 since inception. You're better off investing in an S&P 500 tracker (or US Total Market ETF) as the non-US component is a drag on performance.
Looking at this graph I am assuming that 'Risk' is the variation (or standard deviation) in the amount of return you are getting over the year. For example, you could have a $100 dividend every quarter from the first ETF or $10, $40, $70, and $300 from the second ETF. The first has a standard deviation (or risk) of zero but returns $400 over the year. However, the second has more variation than the first but returns $420. Therefore, in my view the risk of inconsistent returns does not carry an equal weighting as the total return - unless for some strange reason, consistency of return is more important to the investor than total return. Therefore, based on this graph, VGS alone performs better than every conceivable combination of the two ETFs and I would not bother with VAS at all unless for reasons not specified in this video.
There are serious currency risks issues in investing in international shares these days
Hi Sanjee! I have watched many of your videos and you have helped me understand how investing works. I have just started investing and i just bought 10 shares of VAS. Now i want to invest in international shares and im between vgs and vts. I can see that vts has had a much better long term performance which is what i want, but it looks like it is less popular than vgs. Even in your recent video you recommend vas+vgs as a good combo. Do you think that vas+vts is a better combo or not, and why?
well done on getting started.
I only invest for myself and I’m not an expert so this is only for something to contribute to your thought process. VTS is the US market. There’s a reason why most of the biggest and best performing businesses are US based businesses.
The US is very pro business and very pro innovation. Stable business environment, lower taxes, every industry that exists is in the US so lots of innovation. Attracts really creative people to move and work there. These sorts of conditions don’t exist really anywhere else in the world.
What results is very dominant companies with a lot of staying power and many of the best don’t have debt and no matter what happens in the world, these companies are best placed to pivot and move and innovate and grow.
VGS still great. Many overlapping companies.
Don’t be afraid to invest in both.
Could you pls share your website again so we could learn from ? Thanks
Excellent
Would this be a proficient portfolio composition? (40% VGS 30% VAS 30% VDHG?)
Thanks for sharing your knowledge in the area mate. Just one question: is it a bad idea to diversify etf companies such that the combination is VGS/A200?
A200/VAS/IOZ/STW are more or less all the same. A200 has cheaper Mgmt costs but is more expensive when compared to VAS, personally I've gone for VAS as Vanguard is more well known and the price per unit is lower
@@asalex3615 Thanks!
Hi Sanjee, I want to build a 3 ETF portfolio (Aus/World/Emerging) so lm thinking of 35/ 55/10, is it good or do you suggest another distribution, thanks
Hi Sanjee. Thank you for your valuable videos. As a beginner I thought of going with VAS and VGS. During the researching I found out that there is a seperate financial cost when buying foreign shares. as VGS is mainly outside Aus shares do I need to pay this additional fees. Also I am planning to go with self wealth s the broker as it seems fees are much lesser. It is highly appreciated if u could provide some answers to my 2 questions.
Thanks again
They are listed on the Asx (Australian stock exchange) and they are priced in Aussie dollars. All foreign tax is taken care of for you. You simply provide your accountant with the portfolio tax report at tax time
What do you think about Disney stock right now
legend
Would love to see how to factor the returns for Australian tax payers. Eg VAS pays fully franked dividends and VGS has to deal with foreign income taxes etc.
If I’m retired and vas is my only income then I can get $7100 a year in tax refunds. As one example.
How does this graph look when you factor in “real” returns for Australian investors?
Can you make an update on these
Why shouldn't we look at diversifying ETF companies as well and not focus on Vanguard alone? For instance replace VGS(0.18% fee) by IVV which has a far lower admin fee (0.04% admin fee)
apples and oranges: ivv is way less diversified
Does this risk return curve take currency risk into account?
But are you taking dividend imputation into account and also currency fluctuation? Would the optimum portfolio perhaps have more VAS than 40% because of dividend imputation tax benefits, and reduced volatility due to currency fluctuation? And wouldn't it vary for each individual depending on their tax situation/marginal tax rate?
David great callouts. I agree a key consideration is tax situation/marginal rates. No I didn't take into account franking benefits or currency fluctuations. Thanks for watching
what wrong with IOZ? cheaper management fees
Hello again
are you able to do a video on bond ETFs, in particular AAA
Hi Michael, thanks for the suggestion. Certainly will add it to the list.
And something about tax inefficiency regarding VDCO VDBA VDGR and VDHG
QUAL and A200
How is the risk calculated?
whats the risk
Great work, but the chat about 40/60 50/50 60/40, really who cares, just put what you can in both, reinvest and do monthly top ups equal on both, creating work and headaches to be perfect just isn’t worth the worry. The better one will eventually pull ahead with divi reinvest, trying to balance by selling makes 0 sense
Would you still recommend this?
Great video. Suggested 3x etf combo to consider: VAS, VGS, VTS. 👍
Doubling up bro 👎
VAS, VGS and IVV would be a combo of ETFs to invest in
I want to know how do we buy etf.
Hi you can checkout my video on CommSec about it: ruclips.net/video/r7l9TzulNIA/видео.html
I think the biggest danger for Vas and VGS is the amount of flows invested in by the retail investors . The local barber is investing in these ( with jobkeeper funds ) amd when the tide turns the temperament of those unseasoned will cause massive outflows . Not the time to buy .
How does that impact the price of the ETF?
@@piage84 outflows usually means price falls due to high selling
@@HS-PGA I see. But say there are 2 etfs convering say top 200 au companies. One is VAS and the other is XXX. VAS is way more popular as you said. So, you'd invest in XXX. If the local barbers start selling their VAS shares, the outflow will cause the underlying shares of VAS to lose value. But your XXX ETF will have the same loss, as the underlying value is affected in the same way.
Or am I missing something?
@@piage84 Vas and Xxx aren’t the only shareholders of the the 200 au companies so difficult to say on the underlying and what percentage these etfs contribute to the overall 200 . I guess if it was high then yes your correct
VAS and VGS are the only things im buying when markets crash, VAS has a good divvy and VGS is diversified globally and is good for growth, picking individual stocks is a mugs game from my 20yrs of experience you cant win, ETFS let you sleep at night and they will never go to 0 unless we get nuclear ww3
I have 90% VGS, 6% VDHG, 4% VAS
Is it a good composition??
I'm gone 40% VGS, 40% VAS, VAE 20%. I've already been considering increasing VGS to 50% and taking some off VAS
Yeah it's easy to have a high holding of VAS. I've cut mine down from 60% from the start down to 25% and have opted for long term capital growth.
I constructed an efficient frontier curve of my own which I think is accurate as I also got 60/40 VAS/VGS. The optimal allocation I found with the least risk is 20/40/40 VAS/VGS/VAE, which has roughly the same returns as 60/40 VAS/VGS for significantly less risk.
To get higher returns for VAS/VGS/VAE, I also found 15/55/30 and 10/70/20 where compared to VAS/VGS, they had roughly the same returns for slightly less risk. These allocations does make sense as when you compare VAS and VAE on Vanguard, they have roughly the same returns but VAE has significantly less risk, even less than VGS.
I'm a newbie who started investing in VDHG, should I also add VGS?
No, VGS is already inside VDHG. It's an "all-in-one" portfolio.
@@dylanburrowes what would be a good 2nd etf to go with Vdhg?
@@oknotokcomputer5013 Nothing. You don't need anything else when you're invested in VDHG.
@@dylanburrowes would it be smart to add some dividend etfs or shares?
@@oknotokcomputer5013 Nope.
Have u ever had a Succulent Chinese Meal?
Always the tough questions Nerdtingles
World wide exposure, except for emerging markets where 85% of the worlds population live.
A fair point!
VGS, VAS and VDHG in the middle.
I think you're WhatsApp has been hacked
Thanks Michael - it looks like a spam account pretending to be me.
Hi Sanjee, would you mind clarifying why you made the point at 8:13 about NOT splitting money between ETFs per transaction? Is it just to save on brokerage fees?
You totally read my mind on this one. As a newbie to investing, I have been sitting on investing in VGS/VAS for a LONG time .. 😅 Thanks for putting out these super useful videos!
Vanguard has actually done a paper study for this according to their Vanguard Capital
Markets Model, you can find the research paper if you just search for "ISGGEB", they have indicated that 40% Aus and 60% International is best suited to reduce volatility and maximise gains. I allow myself a -/+5% tolerance, so in that way I can be flexible and not get to worried about it. P.S keep up the good work. I know alot of RUclipsr's tend to push alot of B.S on investing and how to make quick bucks which gets hundreds if not millions of view. But a simple video on the most important factor of portfolio allocation get's fuck all. Goes to show...