Why investors study the Australian Property Securities Index ETF and Ethically Conscious Australian Shares ETF
The Vanguard VAP ETF provides investors with low-cost exposure to listed Australian property companies and real estate investment trusts (REITs).
The VETH ETF tracks the FTSE Australia 300 Choice Index and attempts to provide low-cost exposure to Australian shares, with an ethical filtering process to exclude shares of companies from particular industries and those which have demonstrated ‘severe controversies’.
Want to know (lots) more? Read through our full VETH ETF review: see our VETH ETF review now.
Obviously, an easy way to analyse any ETF or fund like VETH or VAP 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 2022, the VAP ETF has a management expense ratio (MER) of 0.23% while the VETH ETF’s yearly fee was 0.17%. Therefore, VETH 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.
Three-year return?
As Jerry Maguire said, ‘show me the money’. 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 positive return one year just to generate inferior 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. VAP had notched up a three-year average annual return of 1.49% in the period through July 2022. At that time, however, the VETH ETF had not yet reached its three-year performance milestone. Past performance is not indicative of future performance for many reasons, this is just one part of our quick analysis (as you can see there’s a lot more to it!).
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 for both of these ETFs is Vanguard, so we can’t rate these ETFs differently. However, the VAP had total funds invested (FUM) of $2,283.54 million and VETH had $405. million. More FUM is a sign of investor interest or uptake.
Conclusion
Don’t forget our free reviews on ASX VAP and ASX VETH.
In summary, the VAP ETF rates more positively for our internal scoring methodology but not by much compared to VETH.
Please, keep in mind, there is much more to zeroing in on 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…
