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

[Belli]

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

Investment managers are expected to exercise all corporate actions and voting rights unless the Trustee (ETFs are a Trust structure and so there are Trustees) tells them how to direct a vote. If they do, the investment manager must exercise the corporate action or voting right according to the Trustee's direction.

It's all rolled up in the concept of a Trustee's fiduciary obligation to act for in the best interests of the beneficial holder. That last part is very broad and may include actions outside of simply expecting the investment manager to vote or even directing them how to vote.

It isn't as straight forward as many would like it to be.

 

[Belli]

This may be of interest to some. With Vanguard I cannot locate the actual number of shares in the portfolio only the percentage of holdings.

With STW it is possible. On the ASX it announces daily the index basket of shares per creation unit. However, that isn't the actual number of shares which can be obtained from it's website (https://www.ssga.com/au/en_gb/indiv...-data/etfs/apac/holdings-daily-au-en-stw.xlsx)

For example the ASX announcement of 6 January shows 1,386 shares per creation unit. The number of shares held is 3,924,542. The number of CBA ordinary shares on issue is 1,706,391,603.

So, while CBA is 7.6% of STW assets, it seems it actually holds only 0.23% of shares on issue. Possibly the same level applies to other ETFs such as VAS or IOZ.

Anybody got any worries about ETF share holder issues?

As an aside, ARG, as at end of last FY held 2,753,731 CBA shares. It also is moving to ESG concepts and, more likely than not, would also hold discussions with the companies it holds on various matters including corporate governance.

 

[qldfrog]

The discrepancy between shares really held and advertised percentage is a worry, do they borrow shares.if this is the case, this is very worrying.do they play future wirh a weight equivalent to. Even more worrying.

We could say it is a timing issue between different data releases but i suspect CBA % and ETF size do not vary rapidly enough . by far... to explain that order of magnitude difference.
.this is a strong push to direct share ownership in my view.

 

[qldfrog]

Or did i misread you @Belli somewhere

 

[Belli]

Or did i misread you @Belli somewhere

He he. I can, very occasionally, be cryptic. I don't believe there is a problem others believe there is. It may be we can read too much into some matters so create a mountain out of a molehill.

The aspect which comes to my mind is some have expressed concerns over investment managers of ETFs exercising voting rights or having talks with companies. If the managers at ARG did the same, we would expect them to do so as it is their roll and they are doing it on behalf of their shareholders yet concerns are raised about managers at ETFs doing the same merely because the shares are held in a different structure. Or how about those superannuation funds, eh? Same deal there.

 

[Belli]

This may give some a laugh.

https://www.ssga.com/au/en_gb/individual/etfs/library-content/products/fund-docs/etfs/apac/au/pvr/annual-proxy-voting-records-au-en-stw.pdf

STW voting (and shares voted) for one particular company.

Vanguard's not as detailed and probably out-of-date but could be of interest.

https://www.vanguard.com.au/personal/en/Investment-stewardship

 

[Belli]

Have a speed read of trusts in Australia if you wish.

Overview of trusts in Australia | David Garry & Associates

Australia’s leading company, trust and superannuation registration firm. Click here for quality services and products, including online ordering.

www.davidgarry.com.au

 

[wayneL]

If you're in your 70s, you're in the eighth decade

If you're 60, are you in the 5th or 6th?

Interesting point re counterparty risk above. The risk, though probably small, is real and one should prove these accordingly (which the market seems to ignore TBH).

 

[Belli]

Counterparty risk higher with synthetics as opposed to the vanilla ETFs.

Module 2 here briefly mentions that aspect.

ETFs course

Learn how to build a portfolio with a single trade. Updated course now covers fixed income ETFs.

www2.asx.com.au

 

[StockyGuy]

If you're 60, are you in the 5th or 6th?

You're in your 7th decade of life outside the womb, if you've had your 60th birthday, sorry bruh (A day after your 10th birthday you are one day into the 2nd decade of your life. A day after your 20th birthday you are one day into the 3rd decade of your life, and so on.)

 

[qldfrog]

If you're 60, are you in the 5th or 6th?

Interesting point re counterparty risk above. The risk, though probably small, is real and one should prove these accordingly (which the market seems to ignore TBH).

not 5th or 6th, just last

 

[wayneL]

Thanks, now I feel even older, ya bastids

... And just to keep things somewhat on topic, I'm slowly accumulating some more small parcels of GOLD and ETPMAG (as well as some more physical) FWTHFIW

 

[Dona Ferentes]

Thanks, now I feel even older, ya bastids

What decayed?

 

[divs4ever]

Counterparty risk higher with synthetics as opposed to the vanilla ETFs.

Module 2 here briefly mentions that aspect.

ETFs course

Learn how to build a portfolio with a single trade. Updated course now covers fixed income ETFs.

www2.asx.com.au

yes indeed , i was confused enough to do the extra research on that in 2011 , vanilla ( NORMALLY ) suits me much better

 

[divs4ever]

Thanks, now I feel even older, ya bastids

... And just to keep things somewhat on topic, I'm slowly accumulating some more small parcels of GOLD and ETPMAG (as well as some more physical) FWTHFIW

i went for gold producers ( and other profitable miners ) in preference to the ETF offerings

 

[wayneL]

What decayed?

As humans, theta (time decay) is always in play. However volatility, (Vega) can increase that time value. (It's complicated). Read, action/movement/being young at heart, create more time value.

But also, gamma increases as we get closer to expiry.... Sometimes I feel 30 sometimes I feel 80 depending on how much woobla I have drunk recently

The Greeks have got a point.

 

[Bill M]

My super fund has expanded the ETF range that you are allowed to invest in.

As a tightwad, I don't like paying more in fees than absolutely necessary. So I like the ETF A200 https://www.betashares.com.au/fund/australia-200-etf/

It only has a annual management fees of only 0.07% p.a., A200 is the world’s lowest cost Australian shares ETF. (on it's website)

Does anyone have an opinion on investing in this ETF? I'm thinking of buying it for my super, it is similar to STW (200) and VAS (300).

Any thoughts?

 

[Belli]

A200 is similar but not entirely the same. Uses a modification of the S&P/ASX 200 Index.

 

[Belli]

The discrepancy between shares really held and advertised percentage is a worry, do they borrow shares.if this is the case, this is very worrying.do they play future wirh a weight equivalent to. Even more worrying.

@qldfrog I think I knew this as I held STW at one stage and did read the PDS before plonking funds with them but it was a long time ago so I went and read it again to see if I was correct. STW does not participate in securities lending. I'll take that as also meaning it doesn't borrow shares either. Time for others to search and read the PDS for other ETFs.

 

[qldfrog]

I find this interesting, these ETFs are not all the bland index mirrors i though they were.
A bit like ooo or even the decaying of BBOZ and GEAR style of market directional ETFs
Thanks for the various input there