What are top Australian shares ETFs for 2021? We think the Vanguard Australian Property Securities Index ETF (ASX: VAP) and Betashares Australian Sustainability Leaders ETF (ASX: FAIR) ASX ETFs could be worthy of closer inspection. Here’s why…
Popping the hood on these 2 ETFs
The Vanguard VAP ETF provides investors with low-cost exposure to listed Australian property companies and real estate investment trusts (REITs).
The BetaShares FAIR ETF provides exposure to the largest Australian shares and focuses on companies which operate ethically. FAIR has been certified by the Responsible Investment Association Australasia (RIAA), as part of the Responsible Investment Certification Program.
Keep learning about the FAIR ETF on our free report page. See the ASX FAIR review.
In addition to using our years of experience analysing ETFs, there are simple tricks any investor can use to compare similar ETFs.
The first is fees. Our team uses quant methods to score ETFs based on its fees and costs, then we slice and dice across sectors, strategy types and providers.
We’ll keep it easy and just study the fees. Based on our data for December 2020, the VAP ETF has a management expense ratio (MER) of 0.23% while the FAIR ETF’s yearly fee was 0.49%.So VAP comes out on top. That said, a more useful metric to know is the fee quartiles that these ETFs find themselves in (note: quartile 1 is best). For example, any ETF which has a fee below 0.3% would be considered in our first (best) quartile.
How do they perform?
Performance matters. Keep in mind, performance isn’t everything — and past performance is not indicative of future performance. It’s just one part of a much bigger picture. The reason we say performance is not everything is because of volatility of financial markets and the economy from one year to the next. Some ETFs and funds can put in a solid return one year just to generate lacking returns the next time around. That’s why we prefer three-year or seven-year track records over one-year track records. It can smooth out the temporary performances caused by external factors. Both ETFs have achieved our three-year performance hurdle. As of December 2020, the VAP ETF had an average annual return of 6.07%. During the same time, the FAIR ETF returned 9.75%.
Too long, didn’t read (TL;DR)
Did you know we have free reports? View our ASX VAP review and ASX FAIR review today.
For us, the FAIR ETF rates positively against our internal scoring methodology, but only just.
We hope this article helped you analyse ETFs. Don’t forget, there’s a lot more to investing well than what we just outlined (risks, diversification, other potentially better ETFs, etc.). Our analyst team at Rask Australia spends months looking at new ASX investments (it’s our day job!). To make your life easier, you can get the name of our team’s top ETF pick for 2021 in a free report. Keep reading to find out how to get our analyst’s report emailed to you right now…
