If you’re looking for the top ETFs this year, the Vaneck Australian Bank ETF (ASX: MVB) and the SPDR MSCI Australia Select High Dividend Yield Fund ETF (ASX: SYI) could be worthy of your watchlist.
Why investors study the Australian Bank ETF and MSCI Australia Select High Dividend Yield Fund ETF
The VanEck MVB ETF provides focused exposure to Australia’s largest industry, the banking sector. This is a low-cost way to invest in the Australian banking industry through a single fund.
The SPDR SYI ETF invests in a diversified portfolio of high-yielding ‘blue chip’ Australian companies – excluding real estate investment trusts (REITs). This ETF tracks the MSCI Australia Select High Dividend Yield Index.
Want to know (lots) more? Read through our full SYI ETF review: see our SYI ETF review now.
Obviously, an easy way to analyse any ETF or fund like SYI or MVB is with quantitative methods, such as studying the fees and past performance (keeping in mind past performance is no guarantee of future performance).
We’ll keep it basic and just study the fees. Based on our data for July 2021, the MVB ETF has a management expense ratio (MER) of 0.28% while the SYI ETF’s yearly fee was 0.35%.So MVB 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.
Show me the money
It’s time to study the track record. 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 compelling return one year just to generate subpar 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 July 2021, the MVB ETF had an average annual return of 6.49%. During the same time, the SYI ETF returned 9.21%.
Finally, at Best ETFs Australia, we apply a rating to the ETF issuer or provider. That is, the company that starts and is responsible for operating the ETF on the ASX. There are too many considerations that go into our scoring to detail here. The issuer of MVB is Vaneck. VanEck ranks highly for our scores of ETF providers and issuers in Australia. Our team considers VanEck to be one of Australia’s leading providers of specialised ETFs and funds for retail investors and advisers. SYI’s provider is SPDR. SPDR ranks highly for our scores of ETF providers and issuers in Australia. We think SPDR is one of Australia’s top 10 ETF providers for advisers and institutions, and its ETFs on the ASX provide good exposure to particular financial markets for retail investors.
Conclusion
Be sure to visit our free ASX MVB review or ASX SYI ETF review.
For us, the SYI ETF rates greater 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…
