Is it a good time to invest in ETF index funds?

[over9k]

I'll question whether a supposedly passive index fund trying to influence the activities of the underlying companies in the index really makes it still a passive index fund?

Doing that takes them at least one step away from the core concept in my view.

Someone has to have the voting rights?

 

[Belli]

Hi all

looking to invest some of my super In vanguard vas and vgs and was wondering if it’s a good time now to invest?

If by now you are not confused by all the waffle, distractions, white noise and various levels of BS in this thread, then you should be.

So in response to the question in your first post, my answer is Yes and it always will be.

 

[Belli]

Someone has to have the voting rights?

Investment Stewardship | BlackRock

As stewards of our clients’ assets, we are committed to constructive, long-term-focused engagement with the companies our clients are invested in.

www.blackrock.com

It needs to be appreciated Blackrock (and Vanguard as well as other fund mangers I assume) manages funds on behalf of various universities, endowments, pension funds and philanthropic organisations. Alongside expecting Blackrock to make absolute bucket loads of money for them, they also have their own principles in regard to corporate responsibility.

Does anyone think those organisations are going to sit quietly by and not let those who managing their funds know of their position on a number of issues when it comes to shareholder vote?

 

[qldfrog]

As I said, all investments must sit well with the person holding. With real estate it can be very labour intensive along with the lots of expenses. A hundred grand invested in a flat in 2002 is now worth around $400,000. Plus rent for those years at say average $250pw 13,000 a year multiplied by 17 years = 221,000. Minus body corp average 1000 pa, rates 700 pa water 400pa, repainting every decade $500 these of course, are all tax-deductible on an investment property. The rent can be put into the market by buying selected top 50 stocks which pay dividends or DRPs. There you have the beauty of diversification, chuck a bit of gold into the mix and you are pretty much good to go regardless of what the various markets are doing.

Just for info for new investors
Costs of flat ownership:
Multiply the BC by 5 to 7 and rates by 2 or 3 from your figures @Ann
Based on cctual flat,actual costs for unit in the 400k range 2022.

Real estate not always what it is claimed to be:
not considering mortgage costs: returns just balance maintenance and ownership costs in Australia so your gains if any are just the capital gain side in my experience

 

[Belli]

Ta @qldfrog for the heads up about XNT.

While it may be interesting (I haven't looked) and useful for others, as the SMSF returned an accounting gain of +11% for FY 2019-2020 and 44% for FY 2020-2021 without reference to the XNT or even involved itself with charting and all those arcane issues, I'll pass on insisting the Trustee, i.e. me, worrying about it - or much else for that matter, such as charting and tarot reading.

 

[qldfrog]

Ta @qldfrog for the heads up about XNT.

While it may be interesting (I haven't looked) and useful for others, as the SMSF returned an accounting gain of +11% for FY 2019-2020 and 44% for FY 2020-2021 without reference to the XNT or even involved itself with charting and all those arcane issues, I'll pass on insisting the Trustee, i.e. me, worrying about it - or much else for that matter, such as charting and tarot reading.

With returns like this,yes just celebrate.
Well done

 

[Belli]

With returns like this,yes just celebrate.
Well done

Nice of you to say that but not deserved. I only applied the same strategy as I have done in the past. Buy when funds are available to invest whatever the market may be.

 

[sptrawler]

I'm sure others have covered the issue, but Vanguard stated a couple of years ago, that they were going to stop being defacto fund managers for fund managers and restrict access for major superannuation and wealth management funds to their products.
Also as has been disclosed recently Vanguard is starting its own low cost super fund, I'm not sure if this has had the effect of reducing the number of major investors that @Ann was alluding to.

I currently don't have exposure to Vanguard, but am considering VHY.

 

[Belli]

I'm sure others have covered the issue, but Vanguard stated a couple of years ago, that they were going to stop being defacto fund managers for fund managers and restrict access for major superannuation and wealth management funds to their products.
Also as has been disclosed recently Vanguard is starting its own low cost super fund, I'm not sure if this has had the effect of reducing the number of major investors that @Ann was alluding to.

I currently don't have exposure to Vanguard, but am considering VHY.

Yeah, I mentioned the super aspect in post #99.

There was also a lot of algorithmic momentum based trading, ceasing of mandates and returning borrowed shares none of which indicates there is deliberate and intentional short-selling by Vanguard and Blackrock in any particular company.

Both Vanguard and Blackrock have both index and actively managed funds by the way so it cannot be assumed placing your funds in the respective index funds means your funds are involved a short selling process.

 

[sptrawler]

My apologies, on a phone, makes the whole cross checking process awkward. Thanks for clarifying just wanted to make sure the issue was flagged.

 

[Belli]

My apologies, on a phone, makes the whole cross checking process awkward. Thanks for clarifying just wanted to make sure the issue was flagged.

Possibly you have some Irish heritage to be sure, to be sure.

 

[sptrawler]

Possibly you have some Irish heritage to be sure, to be sure.

Yorkshire actually and you know what they say us, Scotsmen with the charity removed. Lol

 

[Belli]

i'm not even sure what's going on with SYI - are they even tracking the index at all, or has the index simply changed that much between 30 nov and now:

No it hasn't really but its Index Methodology required it to rebalance and remove Macquarie Group and ASX Ltd. It was announced to the market on 26 November. The announcement also has a link to the Index Methodology.

 

[divs4ever]

Was going to answer @Belli but @divs4ever was faster XNT is actually what you were talking about: the dividends returns included.
This is indeed the right baseline..but for the fact it is not inflation corrected..and as you know 1000$ today is not exactly the same as $1000 in the 70's

ah yes , that pesky inflation factor , hasn't that been misused by many over the last 50 years

and that is why i prefer to focus on divs ( and hope to resist inflation on the way ) i can't do much to control inflation , but i can tinker with the div. returns ( i get )

however others have different views , while i don't NEED to be one of a crowd , it is all good

 

[divs4ever]

No it hasn't really but its Index Methodology required it to rebalance and remove Macquarie Group and ASX Ltd. It was announced to the market on 26 November. The announcement also has a link to the Index Methodology.

that was probably good for me , as MQG is currently my largest direct holding , so reducing indirect exposure a little ...

 

[Bill M]

ah yes , that pesky inflation factor , hasn't that been misused by many over the last 50 years

and that is why i prefer to focus on divs ( and hope to resist inflation on the way ) i can't do much to control inflation , but i can tinker with the div. returns ( i get )

however others have different views , while i don't NEED to be one of a crowd , it is all good

I won't buy any stocks or ETF's that don't pay dividends either. Whilst I totally understand the idea of putting it all back into the company and growing the said company I just don't like it or trust it.

When VHY pays my dividends every quarter, it is a seen dividend in real $$$ going straight into my super account. Then when the franking credits drop in also, it is the cream on the cake, a nice extra. No tax either as it's in pension phase, very nice.

 

[Smurf1976]

Does anyone think those organisations are going to sit quietly by and not let those who managing their funds know of their position on a number of issues when it comes to shareholder vote?

If they're running a passive index fund then I wouldn't expect them to be voting at all.

The point of a passive index fund is that it's not actively managed and is simply tracking the index with others making the decisions.

If the same company also runs actively managed funds then I see no problem with them exercising their vote in respect of the shares held in regard to those actively managed funds but for the index funds, being passive is the point of it.

 

[divs4ever]

I won't buy any stocks or ETF's that don't pay dividends either. Whilst I totally understand the idea of putting it all back into the company and growing the said company I just don't like it or trust it.

When VHY pays my dividends every quarter, it is a seen dividend in real $$$ going straight into my super account. Then when the franking credits drop in also, it is the cream on the cake, a nice extra. No tax either as it's in pension phase, very nice.

i do buy a few stocks that aren't paying divs. yet but they are less than 10% of my purchases , TUA for example , and i DRP most of my ETFs ( CURRENTLY) because i am trying to bulk up the portfolio getting ready for the inflation that is coming

ALSO i worry the pension system may hit some hurdles in the future , and by opting out of selected ( or all ) the DRPs i participate in , i have a better chance of increasing my CASH income ( i see the possibility of having to live entirely from my portfolio income )

luckily for me i don't live a lavish life-style currently .. BUT March 2020 and later was VERY educational when divs were trimmed , delayed and withheld by various companies ( it reinforced my need to have SOME reserve cash , just in case the divs take a holiday for a year or two )

but of course those still working with a secure income have a few extra options , so i get why ETFs ( as advertised ) are very attractive to those that are time-constricted .

 

[divs4ever]

If they're running a passive index fund then I wouldn't expect them to be voting at all.

The point of a passive index fund is that it's not actively managed and is simply tracking the index with others making the decisions.

If the same company also runs actively managed funds then I see no problem with them exercising their vote in respect of the shares held in regard to those actively managed funds but for the index funds, being passive is the point of it.

now i was aware that SOME ETF managers were voting ( not just the two mentioned ) but there are hints , SOME are influencing company choices BEFORE the vote .. and the push towards ESG , 'ethical ' and ' climate friendly theme is a more obvious hint now in earlier years i held AEF ( and had a nice ride ) and they made their investing bias very clear , while other LICs focus on well-managed companies to invest , while some like SOL and SVW will put directors on the board to improve corporate decisions

HOWEVER as mentioned above 'passive' should be PASSIVE with the computer algorithms doing most of the work , ( although some of those 'tracked indexes ' are getting a bit exotic as are some ways to assess the invested companies worth ) ( not that such assessments are entirely bad , just difficult for some investors to understand , i always had some unease over using straight market cap. in weighting decisions )

 

[divs4ever]

Top 10 stocks held

Ranked by the total value of Bell Direct client holdings on a daily basis or as at the last business day of the month. Total value is based on the closing price of the stock for the day or on the last trading day of the month.

Top 10 stocks held

	07 Jan 2022 ranking	06 Jan 2022 ranking	ASX Code	Security Name	07 Jan 2022 VWAP	LAST
	1	1	CBA	CWLTH BANK FPO	$102.086	$102.65
	2	2	CSL	CSL FPO	$285.562	$282.40
	3	3	NAB	NAT. BANK FPO	$29.348	$29.42
	4	4	BHP	BHP GROUP FPO	$43.09	$43.73
	5	5	MQG	MACQ GROUP FPO	$212.878	$211.71
	6	6	ANZ	ANZ BANK FPO	$28.11	$28.40
	7	7	FMG	FORTESCUE FPO	$20.067	$20.37
	8	8	AFI	AUS.FOUND. FPO	$8.576	$8.53
	9	9	ARG	ARGO FPO	$10.219	$10.20
	10	10	LYC	LYNAS FPO	$10.946	$11.06

now this might be just the investing bias of Bell Direct clients but i notice ETFs rarely feature in this list although they DO often feature in the buying and selling daily lists ( and the monthly buy/sell lists as well )

now there are several possible reasons for this ( many Bell investors are 20 plus year clients , so many had CBA , CSL , FMG , LYC from the IPO or shortly after

now the names in that top ten list are NOT static WBC dropped out a while back , RIO left more recently and LYC and ARG have made the list in the last year

i just find this list interesting compared to the various passive index fund holdings