What are top Australian shares ETFs for 2022? We think the SPDR S&P/ASX 50 ETF (ASX: SFY) and Vanguard Australian Shares Index ETF (ASX: VAS) ASX ETFs could be worthy of closer inspection. Here’s why…
Popping the hood on these 2 ETFs
The SPDR SFY ETF is the only Australian ETF providing exposure to Australia’s top 50 listed companies, by market capitalisation. SFY provides a low-cost way to invest in the ASX’s top 50 companies through a single fund.
The Vanguard VAS ETF provides exposure to the largest 300 Australian shares, based on market capitalisation. This is a low-cost way to access top Australian companies through a single fund.
Keep learning about the VAS ETF on our free report page. See the ASX VAS 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 basic and just study the fees. Based on our data for December 2021, the SFY ETF has a management expense ratio (MER) of 0.29% while the VAS ETF’s yearly fee was 0.10%. Therefore, VAS wins on this one. 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 December 2021, the SFY ETF had an average annual return of 13.93%. During the same time, the VAS ETF returned 15.33%.
Too long, didn’t read (TL;DR)
Be sure to visit our free ASX SFY review or ASX VAS ETF review.
For us, the VAS 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 2022 in a free report. Keep reading to find out how to get our analyst’s report emailed to you right now…
