Any difference between Vanguard Index Australian Shares Fund and VAS?

[plubius]

Guys,

What is the difference between...

Vanguard Index Australian Shares Fund and Vanguard Australian Shares Index ETF (VAS)?

I can see one has minimum investment of 5k, management fee (0.75%) and other is EFT and has lower fee.

Performance wise both are very similar in the last 3 years.

Is there any catchy? I couldn't find anything after reading the PDS, Annual report, fact sheet and transactional, operational cost guide.

Thanks!

 

[Bill M]

From memory I think they are the same, it's just that the fees and the way you buy them are different.

The one with the .75% MER is a fund that you can BPay into when you want and you do not have any brokerage fees.

VAS is the ETF version of it. But with the ETF you pay brokerage to buy in and brokerage to sell out. But their MER is only .14%. Personally I would choose VAS as I can buy and sell within seconds. It's up to you which one better suits yourself, cheers.

 

[plubius]

Does that mean with the EFT, I can sell (exit) it at any time if I need the money?

 

[Ann]

Yes Plubius

 

[So_Cynical]

Does the fund pass on franking credits?

 

[Ann]

Yes So Cynical, it is franked at 30% and it also offers a DRP (Dividend Reinvestment Plan).

 

[plubius]

How about that EFT - Vanguard Australian Shares Index ETF (VAS).

If I buy it via my broker, how does it work the DRP (Dividend Reinvestment Plan)?

Do I need to take any action to invest back in it?

 

[Bill M]

When you buy it with a broker the company who does the registration for you (usually Computershare or Link Market Services) will automatically send out documents to your home. With those documents you can fill it in and ask to part of the DRP. You also will have to provide them with your Tax File Number, banking details and communication preferences.

This can all be arranged online too. As a new buyer you are probably better off waiting for the paperwork. Then when you see who is the company looking after the register go online and open an account with them. From there you can do all of the above.

Oh, and yes. If you want to be a part of the DRP you must take action. The default usually is that the dividends get paid into your bank account.

Here are 2 of the main registry companies:

https://www.linkmarketservices.com.au/corporate/home.html
and
https://www-au.computershare.com/Investor/


Good luck.

 

[Darc Knight]

One is a "synthetic" Index Fund, ones an ETF.
DRP should be on the form. Just tick the box.

 

[plubius]

DRP should be on the form

Which form? After I place the order via my broker, do I have to wait for the paperwork to choose it?

 

[Bill M]

The forms will come about a week after you have bought the shares, sometimes longer. In the mean time there would be no harm done for you to sign up to Computershare (link I posted before) it costs nothing.

It will take a couple of days for you to be the recorded owner of the shares you bought. Once you are on the books you can do it all online. Or you can just wait for the paperwork. If you are unsure of what to do it might be better to wait for the paperwork but really the Computershare registry is quite easy to navigate, good luck!

PS: The next distribution is due in early January so you do have a few weeks to get it done.

 

[plubius]

Thanks Bill M.

My current broker is CMC Markets and I'm happy so far with its platform and customer service.

Any thoughts on that EFT - Vanguard US Total Market Shares Index ETF (VTS)?

There has been an on-going capital growth since inception, but it does not provide much income.

 

[Bill M]

Any thoughts on that EFT - Vanguard US Total Market Shares Index ETF (VTS)?

My opinion is that there may be a rather large correction soon in the US market and as such I hold absolutely zero stock in that market. But that is just me, others have different ideas.

 

[Sharkman]

Thanks Bill M.

My current broker is CMC Markets and I'm happy so far with its platform and customer service.

Any thoughts on that EFT - Vanguard US Total Market Shares Index ETF (VTS)?

There has been an on-going capital growth since inception, but it does not provide much income.

i prefer IVV, the Blackrock S&P 500 ETF. same MER (0.04%) but it's domiciled in Aust so you avoid any potential headaches around tax treaties changing in the future (also you don't have to keep filling in a W-8 BEN form for it every now and then, but that's a minor consideration as the form is not terribly difficult to fill in, just an annoying housekeeping task).

doesn't really bother me that it only covers 500 stocks instead of 3600, 500 is plenty diversified enough and the weighting of nos. 501-3600 combined can't be terribly high (i don't know exactly what it is though).

IHVV is the currency hedged version that comes with a 0.10% MER so if you think AUD/USD is likely to rise then that would be the one to go for. however i personally think AUD/USD is headed towards 0.6000 over the next couple of years or thereabouts, so i stick with IVV.

VGS is Aust domiciled but that comes with a 0.18% MER, compared to 0.04% that's going to be a significant hit over the course of several years, if that's your investment timeframe.

 

[plubius]

You read my mind Sharkman! I was reading about that W-8BEN form.

In terms of performance, they are similar in the last 5 years, but IVV has been listed longer since 2000.

I couldn't figure out the benchmark index (CRSP US Total Market Index) of VTS? Is that similar to S&P Index 500?

 

[Sharkman]

You read my mind Sharkman! I was reading about that W-8BEN form.

In terms of performance, they are similar in the last 5 years, but IVV has been listed longer since 2000.

I couldn't figure out the benchmark index (CRSP US Total Market Index) of VTS? Is that similar to S&P Index 500?

it's similar, just broader based, covering around 3600 stocks vs 500. TBH i don't think you can go wrong with either choice - Vanguard is very popular amongst ETF investors, and especially the FIRE community, for good reasons. just wanted to point out that it's not the only game in town, IVV may be narrower but it has the benefit of being Aust domiciled, and it's also a very solid fund with a decent track record (Blackrock i believe has the largest AUM in the world).