A200 - BetaShares Australia 200 ETF

[Ferret]

Strangely, I couldn't find a thread for this ETF.

I'm late to the party with ETFs, but I think I will make much greater use of them for core holdings in the future.

I know there are subtle differences in how A200, VAS, IOZ etc track the indexes, but I'd expect the overall performance to be similar. The areas of difference that are significant to me are management expense ratio and liquidity.

Since dropping its MER in Feb to 0.04%, A200 is the clear winner here, so that's the Australian shares ETF I'm steering towards. It's not as liquid as VAS, but VAS' MER of 0.1% is significantly higher.

 

[Belli]

I know there are subtle differences in how A200, VAS, IOZ etc track the indexes

A brief discussion of the differences in this thread.

VAS v A200 v IOZ performance comparison

I'm trying to learn how to research a stocks performance, is this tool from Sharesight ok? I want to invest in the ASX index and have 3 options. VAS, A200 and IOZ. My immediate thought was to go VAS but then I discovered the other 2 and wanted to compare performance. According to Sharesight...

www.aussiestockforums.com

As an aside, my understanding is the ASX 200 covers 84% of the total market (and 93% of the All Ordinaries) whereas the ASX 300 is 87% of the total market. Not too sure the addition of 100 companies at the smaller end boosts performance to any great degree so I reckon it is much of a muchness as to which broad based ETF is selected but I'm pretty much a dumbo when it comes to things such as that.

 

[divs4ever]

A brief discussion of the differences in this thread.

VAS v A200 v IOZ performance comparison

I'm trying to learn how to research a stocks performance, is this tool from Sharesight ok? I want to invest in the ASX index and have 3 options. VAS, A200 and IOZ. My immediate thought was to go VAS but then I discovered the other 2 and wanted to compare performance. According to Sharesight...

www.aussiestockforums.com

As an aside, my understanding is the ASX 200 covers 84% of the total market (and 93% of the All Ordinaries) whereas the ASX 300 is 87% of the total market. Not too sure the addition of 100 companies at the smaller end boosts performance to any great degree so I reckon it is much of a muchness as to which broad based ETF is selected but I'm pretty much a dumbo when it comes to things such as that.

the difference between VAS and a to 200 focused ETF , that swayed me in 2011 was the 'growth potential ' of those extra 100 smaller cap. stocks , when i had the view that the 'big 4 ' banks had limited paths of growth ( that difference mattered to me in 2011 )

now with the current reduced fees of A200 , the comparison must be closer , when calculating future returns .

 

[Belli]

Only a fevered brain would think that 100 companies at the minnow end would impact overall performance to any great degree when there is a 46% weighting to the Top 10 in these ETFs. As to outperformance they track an index ffs so the market return is .......... tracking the index.

 

[Belli]

@Ferret apologies if I am telling you to suck eggs but as you have said you are late to the party with ETFs just realise that these braod based ETFs such as A200 will, each year, issue a tax-statement to assist in completing your tax return. While each may differ in style, they show these components:

However, you will need to keep it as it will also show any cost-base adjustment which will impact if or when you sell. It looks like this:

Unfortunately, some holders think the tax statement is only necessary for the particular tax year when that is not the case and get into difficulty later on. While they are available from the relevant share registry, you can be up the creek if the ETF changes share registry as in some cases that history disappears. Boring admin work I'm afraid.

 

[divs4ever]

Only a fevered brain would think that 100 companies at the minnow end would impact overall performance to any great degree when there is a 46% weighting to the Top 10 in these ETFs. As to outperformance they track an index ffs so the market return is .......... tracking the index.

fevered it may been but it was a decision made at the time , and a decision i still do not regret making ,however since i participated in the DRP , and recently since i needed some cash for another project , i did take the opportunity to sell the previously purchased shares , leaving the DRP shares run ( leaving a useful holding to start accumulating again from about 65% of the shares originally purchased )

also consider 4 of those top 10 shares , i determined to have limited growth prospects for example i was buying WBC in 2011 for $21.10 , $20.75 , $19.90 ( WBC closed @ $22.56 last night ) that isn't much factoring in 11 years of inflation .

and VAS just tracked a slightly different index ( at a competitive rate to index rivals at the time )

VAS was bought in 2011 from $59.70 down to $52.70 , and sold down recently for $88.00 , so some capital gain

 

[Ferret]

Belli, thanks for sharing your expertise.

I generally try to avoid holding trusts etc that issue these annual tax statements because of the tax complications. I use an industry super fund with a direct share option and in recent years I've bought TCL and APA in this. I wanted to hold these, but the super fund can have the headache of handling the cost base adjustments.

I have some LLC outside of super and their annual tax statements aren't sent until mid September, which is much later than I like. I've been looking to offload these for some time.

I'm aware of the need to adjust the cost bases of my holdings each year based on the figures in the annual tax statements. I keep a spreadsheet for each stock which calculates the cost base of each parcel and I make an adjustment at the end of each FY.

A few years back I acted as executor of my father's will. He had held APA for many years and participated in the dividend reinvestment plan. I had to determine the adjusted cost base for dozens of small parcels. It was an absolute nightmare. Divs, you are a brave man participating in the DRP for VAS!

 

[divs4ever]

Belli, thanks for sharing your expertise.

I generally try to avoid holding trusts etc that issue these annual tax statements because of the tax complications. I use an industry super fund with a direct share option and in recent years I've bought TCL and APA in this. I wanted to hold these, but the super fund can have the headache of handling the cost base adjustments.

I have some LLC outside of super and their annual tax statements aren't sent until mid September, which is much later than I like. I've been looking to offload these for some time.

I'm aware of the need to adjust the cost bases of my holdings each year based on the figures in the annual tax statements. I keep a spreadsheet for each stock which calculates the cost base of each parcel and I make an adjustment at the end of each FY.

A few years back I acted as executor of my father's will. He had held APA for many years and participated in the dividend reinvestment plan. I had to determine the adjusted cost base for dozens of small parcels. It was an absolute nightmare. Divs, you are a brave man participating in the DRP for VAS!

VAS worked for me as hoped ( but VHY when i held worked much better ) , as stated before i had to be cautiously aggressive to hit my 2020 target , had i 20 years to the target date , several strategies would have been different ( say in preparation for March 2020 and the buying afterwards )

the market is effectively one big casino , currently , a holding of automatically selected top 300 ( or 200 ) stocks isn't the worst place to be ( remember VAS was selected as an insurance against my unsuccessful stock-picking elsewhere , as opposed to a more traditional pick of a major bank or two as a 'core holding ' )

the goal at the time was to have an income back-stop/buffer in case pensions disappeared in my lifetime ( not to fund a world-tour or luxury yacht )

wait for the nightmare if CBDCs are introduced

THE FIFTEEN-MINUTE HEN HOUSE -- A SATIRICAL CANADIAN PARABLE (EVERYTHING SUMMED UP IN FOUR MINUTES)

 

[Belli]

A few years back I acted as executor of my father's will. He had held APA for many years and participated in the dividend reinvestment plan. I had to determine the adjusted cost base for dozens of small parcels. It was an absolute nightmare.

No doubt.

Yet if the shares were passed to a beneficiary or form part of a Testamentary Trust, the cost-base is the market value on the day of death. There are ways to make it a little easier for the Executors and/or beneficiaries of a deceased estate.

 

[Ferret]

Yet if the shares were passed to a beneficiary or form part of a Testamentary Trust, the cost-base is the market value on the day of death.

My understanding is that that is only the case for shares (or any asset) that were bought pre-CGT.

Any asset acquired after 19 September 1985 will have its actual cost base passed on to the beneficiary.

 

[Belli]

My understanding is that that is only the case for shares (or any asset) that were bought pre-CGT.

Any asset acquired after 19 September 1985 will have its actual cost base passed on to the beneficiary.

Have a read of this.

"Fortunately, when someone dies, a capital gain or loss does not apply when an asset passes to the deceased person’s beneficiary, their executor, or from the executor to a beneficiary.

This means if you inherit a property, shares, or an interest in an investment asset, the capital gain on the asset is disregarded by the tax man.

There are also exemptions for personal use assets you inherit that were purchased for less than $10,000. This includes furniture, household items and the like.

Generally, CGT is not payable if you inherit collectables such as art, jewellery, stamps or antiques, provided their market value is $500 or less."

Understanding CGT when you inherit - BMO Accountants

When receiving an inheritance people often forget the tax man may take a keen interest in what they describe as your good fortune. When ownership of an asset is transferred, it can trigger a capital gain or loss with potential tax implications. So what are the tax rules when you inherit a...

www.bmo.com.au

 

[Ferret]

Have a read of this.

"Fortunately, when someone dies, a capital gain or loss does not apply when an asset passes to the deceased person’s beneficiary, their executor, or from the executor to a beneficiary.

This means if you inherit a property, shares, or an interest in an investment asset, the capital gain on the asset is disregarded by the tax man.

Wow. Either this is very poorly written or the author has misunderstood the rules.

CGT is not payable when an asset passes to the executor or beneficiary, but the CGT obligation up until date of death is NOT extinguished. It will be added to the CGT obligation accrued after death in the estate and then in the beneficiary's hands.

The full CGT will eventually have to be paid when the asset is disposed of, but with the special provisions for the deceased's home. Hence the need for an accurate cost base for the asset extending back to the post 19 Sept 1985 date of purchase.

From the ATO:
https://www.ato.gov.au/Individuals/...ains-tax/How-CGT-applies-to-inherited-assets/

Disposing of inherited assets​

Generally, capital gains tax (CGT) does not apply when you inherit an asset.

When you sell an asset you have inherited, and the asset is:

• not a property, the normal rules apply for calculating your CGT
• a property, such as a house, it may qualify for the main residence exemption from CGT
• a collectable or personal-use asset, the normal rules apply – that is, the asset is subject to CGT unless it was acquired for less than the thresholds for these types of assets .

Cost of the asset​

Unless the asset you inherit is fully exempt, you will need to know its cost base to work out your CGT when you sell it. Depending on the circumstances, the cost base may be based on the value of the asset:

• when the deceased acquired it
• when they died.

 

[Belli]

Either this is very poorly written or the author has misunderstood the rules.

Could be but:

"In relation to estate planning there is a special rule that allows any capital gain or capital loss made on a post-CGT asset to be disregarded if, when a person dies, an asset passes:

• To their “beneficiary” or their “legal personal representative” (LPR), or
• From their “LPR” to a “beneficiary”."

Does Inheriting Shares in a Will trigger a CGT Event?

Earlier this month I was contacted by Elizabeth Moran on behalf of the Australian Investors Association to answer a complex question.

www.ellislaw.com.au

It's why lawyers were invented.

 

[Belli]

@Ferret - and any other person reading this thread. I may have misled in the above post. I was in a hurry and thinking of Off Market Transfers. The Executor may have to take account of the deceased's cost-base.

In general, I take the position that the ATO provides general advice but I wouldn't totally rely upon it and it is always best to seek professional legal advice. For sure it costs but, depending how complicated the matter is, there could be an even greater cost in getting it wrong.