Vanguard or BetaShares for your diversified ETF?
Late last year, BetaShares entered the diversified exchange traded fund (ETF) space, joining Vanguard who were the only providers in Australia at the time.
Both had four funds in high growth (90% growth/10% defensive), growth (70%/30%), balanced (50%/50%) and conservative categories (25%/75% for BetaShares; 30%/70% for Vanguard).
Vanguard had a management fee of 0.27% for its diversified ETFs; while BetaShares currently offered a slightly lower rate of 0.26%, which would be adjusted to 0.39% for all four funds except for the high growth fund, which would be lowered to 0.19% on 15 December, 2020.
According to FE Analytics, since the start of the year to 31 October, 2020, Vanguard’s Diversified Conservative Index ETF had the best return, with 1.65%.
This was in contrast to BetaShares’ counterpart which lost 2.31% since the start of the year.
Vanguard’s Diversified Balanced ETF returned 0.06% while BetaShares’ counterpart lost 0.35%.
When it came to diversified growth, Vanguard lost 1.57%, while BetaShares lost 2.31%.
And finally, for diversified high growth, Vanguard lost 3.68%, while BetaShares lost 4.15%.
Both firm’s products where relatively new to the market, as Vanguard launched its line-up on 20 November, 2017.
Since inception to 31 October, 2020, Diversified High Growth returned 17.5%, Diversified Growth returned 17.32%, Diversified Balanced returned 16.36% and Conservative returned 15%.
BetaShares launched its four diversified products last year with Diversified High Growth first on 3 December and Diversified Conservative Income last on 10 December.
BetaShares’ diversified funds were comprised of other ETFs that invested in specific asset classes, while Vanguard’s invested in its own wholesale funds.
All four Vanguard funds included the same underlying funds: Australian Shares Index, International Shares, International Shares Index (Hedged), International Small Companies Index, Emerging Markets Shares Index, Global Aggregate Bond Index (Hedged), and Australian Fixed Interest Index.
However, the conservative strategy also provided an allocation to Vanguard’s Cash Reserve fund.
Performance of BetaShares and Vanguard diversified ETFs since the start of 2020 to 30 October 2020
AUTHOR
Chris Dastoor
Recommended for you
Australian ETFs saw flows of $5.8 billion in July, more than double the previous month, and adviser adoption is tipped to help total flows reach $50 billion by the end of the year.
Pinnacle’s London affiliate, Life Cycle Investment Partners, has secured over $15 billion in FUM in its first year and achieved profitability, the firm’s fastest affiliate to do so.
For foreign fund managers looking to come to Australia, a financial services law firm has shared which regulatory option offers them the quickest pathway?
Betashares has partnered with a US fund manager to form a private capital division aimed at providing financial advisers and wholesale clients with private markets investments.
