Vanguard Managed Funds vs. Vanguard ETFs, Which is Better? (after the fee changes)

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Күн бұрын

Vanguard Managed Funds vs. Vanguard ETFs, Which is Better? In this video, I will compare two equity mutual funds in managed funds and ETFs to see which one offers better returns.
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Пікірлер: 47

@ilarioMi 3 жыл бұрын

Awesome video full of important information. Thank you

@IreneZhu 3 жыл бұрын

Thank you for watching!

@andylongfire 3 жыл бұрын

I always knew that ETFs are better choice than Managed Funds just based on the structure of the investment, but never bothered to dig deeper myself. 谢谢花时间做了这么详细的研究 👍

@IreneZhu 3 жыл бұрын

关系到自己的回报 also sharing is caring 😁

@siredith8846 2 жыл бұрын

Have a mix of managed funds and etfs. Vanguard Australian and Global Property managed funds actually outperformed their equivalent etfs. I also own Australian inflation linked bonds fund, and you can only access this as a managed fund. My favourite etfs are VHY and VVLU. VHY income returns are awesome and VVLU just keeps growing. While the management fee of etfs are lower, you can make frequent deposits to managed funds and only pay a spread which is very low. Plus, if you only have a small amount of money, managed funds would work better as the unit prices are far far lower than etfs.

@IreneZhu 2 жыл бұрын

Thanks for sharing Edith!

@satyanveshi1939 2 жыл бұрын

This is amazing Irene. What will be interesting is if you can do this study over 3 and 5 year period to get a broader view. Thx for the effort ...

@IreneZhu 2 жыл бұрын

I will definitely do an update video in the future, thanks for your support Rajesh!

@VagabondRob555 2 жыл бұрын

Great channel! You came up in my Alibaba search. I've had a binge older vids too. Do you have a favourite Vanguard ETF? Cheers You will have 1000 subs soon.

@IreneZhu 2 жыл бұрын

Thanks Rob 😁 VAS is definitely one of my favorite, I recently added positions to VAE. I didn’t know people like to see a bit of stock analysis of my Alibaba video because my previous video about how to read financial reports didn’t do well ( too technical therefore boring? don’t know). Thanks for dropping by and have a lovely weekend Rob!

@subithd 2 жыл бұрын

Thanks for sharing. I am just wondering if you can make a video on set limit usually its said + or - 3% NAV. how to get benefit from it. thanks Irene.

@IreneZhu 2 жыл бұрын

Great suggestion Subith! I will plan a video on this.

@chidorikaname3913 2 жыл бұрын

this is great. but next time please explain the CGT involved with mutual fund vs ETF

@IreneZhu 2 жыл бұрын

The funds I was comparing are literally the same index fund, which doesn't have turnover as high as active managed fund. So the CGT for the index managed fund and ETF should be similar.

@judeffr Жыл бұрын

Will you do a follow up on the next 12 month to see if the result for Australian shares are the same. Great video btw very helpful ☺️

@IreneZhu Жыл бұрын

Sure, will do! Thanks for stopping by.

@izjay5888 Жыл бұрын

Hi Irene, Great video! Would you be able to do an update video now that Vanguard no longer has a brokerage fee for putting money in for ETFs? "ETFs now only apply the brokerage fee when you withdraw your money.

@IreneZhu Жыл бұрын

Sure! I will look into it.

@lalrishi 2 жыл бұрын

excellent info thanks a lot for sharing .. have a few queries - is there a charge to keep my funds into my Vanguard cash account or would we get interest from vanguard to keep funds in their cash account ? - Is it possible to setup up a direct debit of say 500 dollars on 15th of each month into a vanguard managed fund without logging in each time through the Vanguard account ? - is it possible to transfer automatically from a Vanguard bond fund (park fund here ) to a Vangaurd managed fund a fixed amount each month automatically so I can keep getting interest on my bond fund while I keep invest in equity to enable DCA

@IreneZhu 2 жыл бұрын

Thanks for stopping by Rishi! To answer your questions: 1, Yes we do get interest for the funds sitting in Vanguard cash account, it is held on deposit with ANZ, currently it offers 0.35% 2. We can deposit same amount periodically to the cash account but as far as I know Vanguard doesn’t have auto-investing feature so far, so the answers to your questions 2&3 would be no. I know the broking site Pearler has this feature or most of the Robo-advisors can offer this service however they use ETFs not index managed funds though. Hopefully this info helps.

@lwib8172 2 жыл бұрын

Hi Irene, thx for the info. I'm new to etf. I'm interested to buy VAS & VGS for long term investment. But I just find out for any regular monthly direct credit from my bank acc to these funds will be charged $ 9/ transaction. Is it true? How to avoid too many broker fees then? Thx u so much.

@IreneZhu 2 жыл бұрын

Hello, thanks for stopping by! After Vanguard changed its fee structure, how much and how often do we do dollar cost averaging is really important to minimize the new $9 brokerage fees. Say if we DCA $1500 per month EACH into 2 ETFs (VAS & VGS) for a year, previously we would be charged roughly $72 per year, converted to new fee structure, it only equals 8 times of buying = 4 months of DCA, we are paying more than before. There are 2 solutions: 1, invest less frequently with larger amount 2, switch to VAN0002AU for VAS and VAN0003AU for VGS (for these 2 identical funds in different forms, the management cost is the same!). You can also check this Optimal investment schedule Calculator: investcalc.github.io/ to work out your investing schedule if you wish to continue to invest in ETFs. Hopefully this helps 😀

@Andrzesz 2 жыл бұрын

Hey Irene, great video! I think in the long term mutual funds should perform better than ETFs because dividends are fully invested. With the ETFs there is always some money left, awaiting the next distribution. I was thinking how to calculate the performance of mutual fund vs ETFs taking into account that subtle difference but I just can't work it out.

@IreneZhu 2 жыл бұрын

Thanks for stopping by Andrew! One of the biggest drawbacks of managed funds compared to ETFs is when investors withdraw units from the fund for cash, fund managers might be forced to sell which will trigger internal capital gain tax, which would be shared by all the investors including the ones who continue to hold.

@Andrzesz Жыл бұрын

@@IreneZhu yes, correct. What I meant with the dividends is that the ETF dividends are always not fully invested as there is always remaining cash awaiting the next distribution. Distributions from managed funds are always fully reinvested and can compound immediately. That will definitely make a difference, but I'm not sure how to calculate it.

@IreneZhu Жыл бұрын

@@Andrzesz We can either use spreadsheet with the compound formula set up, or you can use Sharesight to help us calculate.

@Andrzesz Жыл бұрын

@@IreneZhu all the spreadsheets formulas that I know assume that the distributions are fully invested and compound immediately. That's not the case with the ETFs. Maybe I'm thinking too much about it but it bothers me that I can't solve that relatively easy mathematical problem.

@zheyuzhu9155 2 жыл бұрын

你好Irene老师，看了视频我是不是可以理解VGS和0003AU是跟踪一样的指数，区别在于他们结算的价格不一样？我如果频繁定投还是选择Managedfund比较好？谢谢

@IreneZhu 2 жыл бұрын

老师不敢当，叫我Irene就好😉 是的 VGS 和 VAN0003AU追踪的是同一个指数, 一般情况下基金公司都是先建managed fund后有ETF, VAN0003AU是1997年就有了，而ETF2014才有。Managed fund是no-load mutual fund，投资者和基金公司直接买入和赎回，所以交易价格肯定是买卖的NAV，没有变数.ETF 因为放到了stock exchange上去交易，虽然ETF的NAV还是非常非常接近它实际的NAV而且宽基指数基金的买卖差价(spread)一般比较小，但是它的价格还是有一个浮动的可能性的（比如你可以limit order ETF,但是不可以limit order managed fund). 还有就是Brokerage fee, 如果你频繁投资或者每次每个mutual fund数额不是很大，虽然managed fund的managed fee会小贵一点 (~+0.05%) 还是managed fund比较划算。希望这个答案可以帮助到你😀BTW 咱俩可能是本家？都姓朱?

@zheyuzhu9155 2 жыл бұрын

@@IreneZhu 感谢感谢，讲的非常清楚！是的，咱们是本家😁

@jeremylehner 2 жыл бұрын

I really enjoy Vangaurd Personal investor. What is strange is how there is no VTS Vangaurd total US market index Managaed funds. I just have a 50/50 split between Australian and International with dividends reinvested.

@IreneZhu 2 жыл бұрын

Yea, it’s strange indeed that VTS and VEU are not available on VPI. Thanks for stopping by!

@Daniel-bi1iu 2 жыл бұрын

I’m a bit confused about the buy/sell spread of Vanguard mutual funds. Does the 0.1% buy/sell spread means vanguard will charge us 0.1% of our capital whenever we buying or selling the mutual funds? It may cost us more if it is. Thx.

@IreneZhu 2 жыл бұрын

Hi Daniel, for managed funds the actual unit price we end up buying/selling would be x% more expensive than the current NAV, we can consider this as the transaction cost charged by the funds (in Vanguard's case, it is set by Vanguard). ETFs have spread as well, but it's determined by the market competition instead of being set by the fund provider and it's normally tighter. Because if it's wider, this ETF would lose its market from other ETFs.

@Daniel-bi1iu 2 жыл бұрын

@@IreneZhu Thank you, Irene. Assuming someone invests 100k to one of vanguard mutual funds, the buying/selling spread is 0.1%. Does this mean he would be charged $100 when buying and selling it? On the other hand, if he invests 100k to relative ETF, he only needs to pay a $9 brokerage fee when buying and selling it. Is this the case? Please correct me if I'm wrong ：）

@IreneZhu 2 жыл бұрын

Hi @@Daniel-bi1iu Let's use VAN0002AU (spread 0.05%) vs VAS (generally around 0.06%) for example and let's ignore the management fee as it's deducted in the fund itself. When you invest $100k, for VAN0002AU you would pay $50 as transaction fee, $60 as the transaction fee + $9 brokerage fee for VAS ONLY IF YOU MAKE THE MARKET ORDER. To buy/sell managed fund, investors don't have much choice other than putting a amount to invest and the spread is automatically deducted; while investing in ETF you can take control by placing limit orders but if your price is way below the market price the order may not be executed.

@Daniel-bi1iu 2 жыл бұрын

@@IreneZhu Thank you, I don't know the EFTs occur a transaction fee. Where can I find the ETFs' buying/selling spread or how can I calculate it? VAS only shows a 0.1% management fee and it says no indirect cost.

@IreneZhu 2 жыл бұрын

@@Daniel-bi1iu This is a hidden cost if you trade at market price but for ETFs we can simply avoid it by placing limit order which we normally do. If you want to check it, when you place an order, check the market depth, the spread is the lowest ask/sell price - the highest bid/buy price. The more liquid of an ETF, the narrower is the spread.

@saxonheighton4384 Жыл бұрын

Hi Irene , Did you keep going with this experiment and did the results stay the same ? I’ve invested in managed funds and this video stays rent free in my head questioning if I have made the right decision 😂

@IreneZhu Жыл бұрын

Hi Saxon, maybe it's time for me to do another comparison again. With many brokers offering zero brokerage fees (eg CMC if less than $1k) I have invested more into ETFs to be honest simply because they can be carried with me wherever the brokers I use.

@jkndmiththinda 2 жыл бұрын

What is the tax impact of managed funds and ETFs? I read for managed fund gains you will have to pay more tax, is that correct?

@IreneZhu 2 жыл бұрын

Managed funds are less tax efficient than ETF because fund managers are sometimes forced to sell assets for cash to pay out exiting investors, which will result in captal gain tax. New video this Saturday is about the drawbacks of managed funds. Thanks for watching!

@sarahyangwerk7608 Жыл бұрын

@@IreneZhu Thanks Irene, fantastic video! Just for the convenience of other meticulous readers, the drawbacks of unlisted managed funds you did is kzfaq.info/get/bejne/nduXa8dertO5hGQ.html

@asdxfey3919 2 жыл бұрын

Anyone have an idea why van price is much lower than the share price?

@IreneZhu 2 жыл бұрын

Both of the ETF and managed fund hold the same securities in the fund (if they track the same index), their own NAV is calculated based on their own net asset/#outstanding shares/units. So these two numbers are not really related, but the performance should be very close depending on the tracking error. The NAV of a managed fund is around $1~$2 is probably because they have originally issued more units (eg. such as money market fund always try to keep NAV around $1 - investors will receive $1.00 back for every $1.00 invested).