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ETF fees

Discussion in 'Investing Strategies' started by JJP, 19th Mar, 2019.

  1. JJP

    JJP Member

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    Hi new here,

    I have been investing in shares for around 2 years now. (I’m 26) I have invested in individual companies and recently a few etfs.
    I have a strong interest in a few betashares etfs which include hack (cyber security), rbtz (robotics and AI) ndq (American tech) and the basic a200.
    I have an even amount invested in all 4 etfs but I’m concerned over the fees charged.
    0.67%, 0.57, 0.48%, 0.07% respectively.
    Which all amounts to a whopping 1.79% in fees..I believe all these etfs excluding the a200 will really outperform basic large index funds over the next couple of decades but I’m starting to wonder if the fees will outweigh my returns. Would I be better off investing in a basic index such as vgs and a200 with very low fees but potentially less growth?
    Any help would be much appreciated.

    P.s also interested in adding ASIA (tech) another 0.67% fees..

    Thanks
     
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  2. RS Gumby

    RS Gumby Active Member

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    To be fair those fees are fairly standard to low. I have a dozen or so ETFs' and feel the dividends are worth the fee. I have both Betashares and Vanguard, Vanguard may be a touch cheaper but don't sweat it on fees
     
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  3. twisted strategies

    twisted strategies Well-Known Member

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    ASIA fact-sheet


    https://digital.feprecisionplus.com/documents/tpp/en-au/PKZ4/FS

    JJP

    do you realize share markets can do down ( a LOT sometimes down 50% or more )

    now all these tech stocks can look exciting BUT do they make a profit ??

    Dotcom Bubble Definition

    What Was the Dot-Com Bubble? (with pictures)

    ( i hold ASIA but it is NOT a major holding .. i still prefer EAI which is a LIC )

    fees are important but so is making a profit for the companies held

    Poseidon Bubble in the Australian Stock Market

    Poseidon Bubble in the Australian Stock Market

    not a tech stock , but a brilliant history lesson on companies with all promise and no profit ( there are hundreds of them on the stock market )

    good luck
     
  4. JJP

    JJP Member

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    I do realise shares go on sale and I very much look forward to the day!
    Interesting articles. How do you know what percentage of companies within the etf are turning a profit?
    Thanks
     
    Last edited: 20th Mar, 2019
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  5. JJP

    JJP Member

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    The Poseidon bubble sounds like crypto haha
     
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  6. twisted strategies

    twisted strategies Well-Known Member

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    worse , it took a lot of confidence out of mining investment .( for many years )

    your ETF fees are not bad IF the investment is making a suitable profit ( but some cannot bring in a positive total return every year )

    the shares in your ETF portfolio ??.. well that is up to YOU ( researching ) that is one area where the better LICs shine .. the fund managers will give a half-yearly ( or yearly ) summary of there successes , disappointments and investment moves .

    depending on your ETF all it is designed to do is copy a notional index ( a bundle of popular robotics shares for example , so you get whatever is heavily traded .. hoping the pro and retail traders know what they are doing )

    look at the ASX 200 that has ( and has had in the past ) several dud shares that have LARGE market capitalizations despite being badly run for years
     
  7. JJP

    JJP Member

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    Yeah I have my concerns over the banks and mining stocks being at the top of the a200 so will diversify internationally and evenly weight each contribution to a200 with VGS.
     
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  8. twisted strategies

    twisted strategies Well-Known Member

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    careful when investing overseas , some businesses rarely pay dividends ( and often pathetic ones in their home currency .... and only look good because of a weak Australian dollar )

    one Australian ETF to check ( very carefully ) is MVW the key factor here is that it re-balances every 2 months ... ( it in theory trades higher than most )

    the pivotal strategy is that it invests an even amount of cash in 80+ ASX listed companies

    https://digital.feprecisionplus.com/documents/tpp/en-au/MQEN/FS

    i do not hold MVW ( but will seriously consider buying during a major downturn )

    international ETFs ... i have held IEM in the past and sold at a modest profit because it wasn't meeting my requirements

    i currently hold ASIA as a 'growth/Asian ' play ( i also hold EAI which i prefer over ASIA despite ASIA's gains [ up 13% ] )

    i would rather invest in individual internationally focused shares ( despite the extra reading and paperwork )

    good luck
     
  9. JJP

    JJP Member

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    Good point, I already own hack, rbtz and ndq Which is internationally diversified as it is.
    I’m more of a long term player so I’m not aiming to frequently trade. Not looking to touch anything I invest for 20+ years. Also not interested in waiting for dips in the market as I see this as potential wasted gains. When I save enough I invest it irrelevant of how healthily the market is at the time.
    I’m fortunate enough to have bought afterpay and Appen very early on and plan to hold for as long as possible (providing these companies keep growing with good profits).
     
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  10. twisted strategies

    twisted strategies Well-Known Member

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    on the contrary , the ASX still hasn't reached the GFC ( missed by over 300 pints so far ) and that is 11 years ago ( and not adjusted for inflation )

    even timing well each year for your extra buys can compound into a healthy additional advantage ( especially when buying by $value ) over 10 years ( how does June and Joly look each year on the ASX to you .. i like small-caps so i like to buy after Xmas but before Australia day )

    take two examples on my buying in 2011 ( i still hold these stocks )

    VAS ( bought between March and December 2011 ) $59.70 & $59.45 ( bought the same day ) $57.84 , $56.45 , $52.70 ,

    MQG ( bought between June and September 2011 ) $31.93 , $31.55 ( following days ) ,$30.50 ( 10 days after the first two ) $29.53 and $28.50 ( on the same day ) , $25.90 , and $20.00

    waiting doesn't always meaning waiting months or years maybe picking a traditional yearly low cycle in the market you are choosing and putting that order in say $2 under the current trading price ( i am guessing you will not be buying $500,000 lots at a time ) and WAIT .

    say find out when the bigger players sell down to pay their taxes , that is fairly predictable

    you don't need to be super-smart , just careful and a little market-educated

    do they make a profit ( and pay dividends ) sadly that will need careful research ( and some sources are often out-of date )

    High Dividend Yield ETF

    Top 100 High Dividend Yielding ETFs

    ( VHY and SLF appearing so highly on this list does not bode well for the international peers , i hold VHY bought in 2011 , i exited SLF because it wasn't doing enough compared to the selected shares i held in that sector )

    i hope this helps but this is where the hard work pays off ( information sources appear , disappear or just fail to be updated )

    ETF & LIC GUIDE - ETF

    Find A Fund - ETF

    i tend to hold LICs for the fund investment strategy ( use strategies i am not good at )
    and ETFs as a 'sector cover ' ( insurance against poor stock selection )

    this concept might not suit you
     
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  11. Hodor

    Hodor Well-Known Member

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    Your math is wrong. Your actual fee is around .45%
     
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  12. JJP

    JJP Member

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    Please explain?
    Thanks
     
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  13. twisted strategies

    twisted strategies Well-Known Member

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    as i see it your fees should be calculated as an average ( not all the fees added together as a total )

    so i learn towards Hodor's math ( where i assume all ETFs have an equal amount of cash invested )

    i would not expect your new fee total to be over 0.65% ( using the 0.67% having the most cash in it )
     
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  14. JJP

    JJP Member

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    Is this 100% fact or an asumption?
    Can’t seem to find any info on the topic online..
     
  15. Hodor

    Hodor Well-Known Member

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    Fact. As noted fees don't accumulate the way your math shows. Your math is actually a damning review of our education system :(:mad::confused:

    Anyway. Here's a worked example with your stated fees and 1k each, so 4k total invested.
    0.67% = $6.70
    0.57% = $5.70
    0.48% = $4.80
    0.07% = $0.70

    Total fees = $17.90 pa.

    Hopefully that makes things clear
     
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  16. twisted strategies

    twisted strategies Well-Known Member

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    OOPS !!! that should read UNDER 0.65%

    my bad , sorry !!
     
  17. JJP

    JJP Member

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    Yes this makes sense...quite obvious now and Im just realising i was too lazy to do the proper maths.
    thanks
     
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  18. twisted strategies

    twisted strategies Well-Known Member

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    the maths can be confusing ,

    keep that calculator handy

    mine has saved me several times

    cheers !!
     
  19. Luke Vogel

    Luke Vogel Member

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    "I have an even amount invested in all 4 etfs but I’m concerned over the fees charged.
    0.67%, 0.57, 0.48%, 0.07% respectively.
    Which all amounts to a whopping 1.79% in fees.."

    If you've got equal dollar amounts invested in each of the four ETF's, then the average for each dollar invested is not 1.79%, it is 1.79/4 = 0.4475% ... less than 1/2 cent per dollar invested.

    That's not bad considering Managed Funds are often much much higher!
     
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