Here’s how we think about the VHY and GEAR ETFs
The Vanguard VHY ETF provides exposure to the largest dividend-paying Australian shares, based on market capitalisation and forecast dividend yield. It tracks the FTSE Australian High Dividend Yield Index. The index excludes real estate investment trusts (REITs) and caps the total exposure to any sector/industry at 40%.
BetaShares GEAR Fund is an internally geared fund, investing in the largest 200 companies on the ASX, by market capitalisation.
Get our team’s VHY ETF review, available free when you click this link: access the free investment report.
ASX: VHY or ASX: GEAR performance
To make this article easier to digest, we’ll just study the fees or ‘management expense ratio’ (MER). Using data for December 2021, the VHY ETF has an MER of 0.25% while the GEAR ETF had a yearly fee of 0.80%. As a result, VHY comes out on top. Keep in mind, a more useful metric to know is the fee quartiles that these ETFs find themselves in (note: quartile 1 is best). Meaning, we take all the Australian shares ETFs in our database and divide them into 4 quartiles, based on their fees. For example, any ETF which has a fee below 0.3% would be considered in our first (best) quartile.
Performance analysis
Typically, we want to a see ETFs with a three-year track record of good performance. Put another way, when an ETF achieves a three year track record, we score it more compelling than might otherwise be the case. That said, there are exceptions to this rule of thumb. Also, remember that it’s hard to compare an ETF with a hedge fund strategy against other ETFs. Why? Hedge fund ETFs often use inverse or ‘opposite’ strategies which means that they’re designed to move in an opposite direction to the market. Nevertheless, we can see that both ETFs met their three-year performance milestone.
In summary
To keep reading about these two ETFs, be sure to visit our free VHY ETF report or GEAR ETF review.
In summary, the VHY ETF rates better for our internal scoring methodology but not by much compared to GEAR.
Please, keep in mind, there is much more to picking a good ETF. That’s why you should now use these skills to find the best ETF you can. If you want the name of our team’s top ETF pick for 2022, keep reading…
