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
Vanguard expands investor choice with three new exchange traded funds 16 May 11
Vanguard Investments Australia today released details of its three new exchange traded funds (ETFs) along with a decrease in the expense ratios across its existing range of Australian ETFs.
The three new Vanguard ETFs unveiled today are:
- Vanguard® Australian Shares High Yield ETF (ASX code: VHY)
- Vanguard® MSCI Australian Large Companies Index ETF (ASX code: VLC)
- Vanguard® MSCI Australian Small Companies Index ETF (ASX code: VSO)
The new Vanguard ETFs are expected to be quoted for trading on the Australian Securities Exchange (ASX) from 26 May 2011, further expanding Vanguard’s range of diversified and low cost ETFs.
“These three low cost funds complement our existing range of ETFs by offering further choice to investors wishing to augment their Australian shares exposure.” said Joseph Brennan, Chief Investment Officer.
“The funds all track segments of the Australian sharemarket, further enabling advisers and investors to assemble straightforward, balanced, and well-diversified portfolios using low-cost ETFs,” he said.
In addition to launching three new funds, Vanguard has also announced it will lower the management expense ratio on two of its existing ETFs:
- The Vanguard® Australian Shares Index ETF (VAS) will be reduced from 0.27 to 0.15 per cent p.a.
- The Vanguard® Australian Property Securities Index ETF (VAP) will be reduced from 0.34 to 0.25 per cent p.a.
Robyn Laidlaw, Vanguard's Head of Product Development and Management, said:
“Vanguard’s range of broad market index ETFs respond to increasing demand for low cost indexing investment solutions across institutional and retail investors and advisers.
“The Australian ETF market has seen a three year growth rate of 70 per cent per annum according to the ASX and we believe this is predominantly because investors are increasingly conscious that costs matter and indexing solutions represent greater value for investors” said Ms Laidlaw.
About the new range of Vanguard ETFs:
Fund Name |
ASX Code |
Fund Objective |
About the index |
Fee p.a. |
|
Vanguard Australian Shares High Yield ETF |
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 relative forecast dividend yield. |
0.25 |
|
Vanguard MSCI Australian Large Companies Index ETF |
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. |
0.20 |
|
Vanguard MSCI Australian Small Companies Index ETF |
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. |
0.30 |
For further information on Vanguard’s range of Exchange Traded Funds please visit www.vanguard.com.au/etfs
Vanguard is the issuer of the Prospectus on behalf of the US listed exchange traded funds (“ETFs”) described in the Prospectus. Vanguard has arranged for interests in the US ETFs to be made available to Australian investors via CHESS Depositary Interests that are quoted on the AQUA market of the Australian Securities Exchange (“ASX”).
Vanguard ETFs will only be issued to Authorised Participants, that is, persons who have been authorised as trading participants under the ASX Operating Rules. Retail investors can transact in Vanguard ETFs through a stockbroker or financial adviser on the secondary market.
Investors should consider the Prospectus and PDS in deciding whether to acquire Vanguard ETFs. Retail investors can only use the Prospectus and PDS for informational purposes.
We have not taken your circumstances into account when preparing this publication so it may not be applicable to your circumstances. You should consider your circumstances and the relevant PDS and/or Prospectus before making any investment decision. You can access the relevant PDSs and/or Prospectus at www.vanguard.com.au or by calling 1300 655 101.
This publication was prepared in good faith and we accept no liability for any errors or omissions. Not all articles are prepared by Vanguard so they may not represent our views.
‘Vanguard’ ‘Vanguard Investments’ ‘Plain Talk’ and the ship logo are trademarks of The Vanguard Group, Inc
© 2011 Vanguard Investments Australia Ltd. All rights reserved.
To the extent that any ratings, opinions or other information of Standard & Poor’s Information Services (Australia) Pty Ltd (ABN: 17 096 167 556, Australian Financial Services Licence Number: 258896) (“Standard & Poor’s) constitutes general advice, this advice has been prepared by Standard & Poor’s without taking into account any particular person’s financial or investment objectives, financial situation or needs. Before acting on any advice, any person using the advice should consider its appropriateness having regard to their own or their clients’ objectives, financial situation and needs. You should obtain a Product Disclosure Statement relating to the product and consider the statement before making any decision or recommendation about whether to acquire the product. Past performance is not a reliable indicator of future performance. Ratings can change or cease at any time and should not be relied upon without referring to the meaning of the rating.
For more information regarding ratings please call S&P Customer Service on 1300 792 553 and also refer to Standard & Poor’s Financial Services Guide at www.fundsinsights.com. Each analytic product or service of Standard & Poor’s is based on information received by the analytic group responsible for such product or service. “S&P” and “Standard & Poor’s” are trademarks of The McGraw-Hill Companies, Inc. © 2011 Standard & Poor’s Information Services (Australia) Pty Limited.
The funds or securities referred to herein are not sponsored, endorsed, or promoted by MSCI, and MSCI bears no liability with respect to any such funds or securities. For any such funds or securities, the Prospectus or the Statement of Additional Information contains a more detailed description of the limited relationship MSCI has with The Vanguard Group and any related funds.
FTSE®” is a trade mark jointly owned by the London Stock Exchange Plc and The Financial Times Limited and is used by FTSE International Limited under licence. “ASFA™” is a trade mark of The Association of Superannuation Funds of Australia (“ASFA”). “All-World” is a trade mark of FTSE International Limited. The FTSE ASFA Australia High Dividend Yield Index and the FTSE All-World ex-US Index is calculated by FTSE. FTSE and ASFA do not sponsor, endorse, or promote the fund; are not in any way connected to it; and do not accept any liability in relation to its issue, operation, and trading.
