Smart Investing
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The Federal Budget’s confirmation that the annual cap on concessional superannuation contributions for all fund members over 50 will halve to $25,000 from the 2012-13 financial year, has some investment commentators envisaging that more investors will turn to negative gearing.
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We've been told by the financial community at large that it's a tough time to be an investor. The financial markets are extremely volatile. Bond yields are near historic lows. The outlook is uncertain.
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The latest bouts of sharemarket volatility and this month’s cut in official interest rates once again highlight the crucial role of bonds in a properly diversified investment portfolio.
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Self-managed super funds typically have a much high exposure to cash than fixed interest.
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The Australian superannuation industry reverted this week to its unwanted status as one of the government’s favourite Budget ‘hollow logs,’ with billions of dollars in savings extracted from the system by reneging on a tax break meant to encourage higher retirement savings, and a doubling of the concessional tax rate on the super contributions of those earning more than $300,000.
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News & Commentary
Three new Vanguard ETFs quoted on the ASX 26 May 11
Three new Vanguard Exchange Traded Funds (ETFs) will this morning be officially quoted for trading on the Australian Securities Exchange (ASX).
Tapping into investor and adviser demand for simple, low cost and transparent investment solutions, ETF take-up in Australia has grown 70 per cent per annum over the past three years, to nearly $5 billion* in assets.
"The launch of these new ETFs today is in response to increasing demand for low cost investment solutions across institutional and retail investors and advisers." said Robyn Laidlaw, Vanguard's Head of Product Management and Development.
"Vanguard ETFs offer a variety of opportunities for investors, both retail and institutional, to develop and maintain diversified, efficient portfolios. They can be used to execute a range of portfolio management functions from a core investment to a portfolio completion tool or shorter term as a cash equitisation vehicle," she said.
The three new ETFs quoted on the ASX today are:
The Vanguard Australian Shares High Yield ETF (ASX code: VHY)
Seeks to match the return (income and capital appreciation) of the FTSE ASFA Australia High Dividend Yield Index (before fund fees and expenses). The FTSE ASFA Australia High Dividend Yield Index generally comprises approximately 60 securities listed on the ASX with higher forecast dividend yield relative to other companies listed on the ASX. VHY has a fee of 0.25 per cent p.a.
The Vanguard MSCI Australian Large Companies Index ETF (ASX code: VLC)
Seeks to match the return (income and capital appreciation) of the MSCI Australian Shares Large Cap Index (before fund fees and expenses). The MSCI Australian Shares Large Cap Index targets coverage of around 70 per cent of free float-adjusted market capitalisation of the Australian share market. VLC has a fee of 0.20 per cent p.a.
The Vanguard MSCI Australian Small Companies Index ETF (ASX code: VSO)
Seeks to match the return (income and capital appreciation) of the MSCI Australian Shares Small Cap Index (before fund fees and expenses). The MSCI Australian Shares Small Cap Index is a small capitalisation index generally consisting of the smaller companies on the Australian equity market targeting coverage of around 14 per cent of free float-adjusted market capitalisation of the Australian share market. VSO has a fee of 0.30 per cent p.a.
Vanguard also announced last week that it has lowered the management expense ratio on two of its existing ETFs:
- The Vanguard Australian Shares Index ETF (VAS) has been reduced from 0.27 to 0.15 per cent p.a.; and,
- The Vanguard Australian Property Securities Index ETF (VAP) has been reduced from 0.34 to 0.25 per cent p.a.
Vanguard also offers the Vanguard All-World ex-US Shares Index ETF (VEU), and the Vanguard Total US Market Shares Index ETF (VTS).
