Author Topic: Actual returns from vanguard etfs  (Read 5500 times)

kiwiozearlyretirement

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Actual returns from vanguard etfs
« on: October 13, 2019, 08:23:02 AM »
I worked out my returns since I set up my smsf 2 years ago. I have been investing entirely in vanguard etfs. Mainly vgs, vhy and some vas. My return is a lot less than that reported on the vanguard performance information. It is similar to that shown on etfwatch. I used moneychimp return on investment calculator as my inputs have not been regular and this gives an estimate based on regular inputs. Has anyone else done their return for vanguard etfs?
I have been doing a bit of naughty market timing so I wondered whether it was that which was dragging down my return.

marty998

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Re: Actual returns from vanguard etfs
« Reply #1 on: October 13, 2019, 02:08:36 PM »
Do those returns include dividends reinvestments?

I'm also curious about this. Gut feel my returns *seem* to be inline with the published figures, when I exclude DRPs from my cost base and treat them as gains instead.

mjr

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Re: Actual returns from vanguard etfs
« Reply #2 on: October 13, 2019, 10:51:32 PM »
You don't say how much is a "lot less'.

I checked the results of my holdings in VAP, VAS and VTS with sharesight and compared it to Vanguard's published performance figures.  The differences were less than 1% (arithmetically)

kiwiozearlyretirement

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Re: Actual returns from vanguard etfs
« Reply #3 on: October 14, 2019, 09:12:17 AM »
To clarify I have almost exactly 50 percent in each of vhy and vgs andhave only recently picked up some vas. So I figure I should have an average of the returns of both.
From vanguard the gross returns including dividends for the tax year are:

2017-2018  vgs 15.4 vhy 2.81. Average 9.1
2018-2019  12.3  Vhy 14.51 average 13.4

Which roughly gives me an average of 11.25 percent per year. I know that wonít be exact but they donít do figures for 2 years. This does not include brokerage but I would only be spending $500 a year on brokerage.

My return is 8.75 with dividends all reinvested and after tax. Itís a smsf so presumably the tax rate is 15%. But that should only be on dividends and realised capital gains. So I was surprised and disappointed that it seems so different. What sort of amounts have others been getting?

The etf watch does not specify whether dividends are reinvested or what the exact time period is but the returns are listed for one year.

 vhy 8.48
vgs 8.78

This is more like my return. Are there any sites that are as detailed as Vanguardís but independent about returns?
I have been doing this stupid thing where I think I can get a $1 off the unit price based on recent fluctuations and put in an order. The price goes up so I miss out and I wait till I canít stand the cash building up and then buy at an even more expensive price. Feel free to tell me you have had better returns from just buying at the market price on the day.

Experimentor

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Re: Actual returns from vanguard etfs
« Reply #4 on: October 14, 2019, 02:30:08 PM »
Maybe a function of timing of the purchases?

Depending upon when acquisitions were made during the year, you might've missed the quarterly dividend or a spurt of growth if the growth was contained to only a few months of the year. Also the brokerage you mentioned.

I think vanguard's returns are based on an investor holding 1-unit @ 1 July and then what return (both capital and distribution) they would receive by 30 June. Also on a pr-tax basis.

kiwiozearlyretirement

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Re: Actual returns from vanguard etfs
« Reply #5 on: October 14, 2019, 07:43:51 PM »
Yes I guess that makes sense. If I made large purchases after the dividend record date I would consistently miss this. For vhy which has limited capital growth this would be crucial. My out of super etfs where I contributed less but had a greater starting balance, had returns of 10.75 over the same period. I have had an addiction to vhy as it seems cheap for the dividends it returns compared to vas. I have been focused on dividends to avoid having to sell during a downturn to fund living expenses.  But recently vas has had very similar dividends and also has had the capital growth.

kiwiozearlyretirement

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Re: Actual returns from vanguard etfs
« Reply #6 on: October 14, 2019, 07:45:26 PM »
I would still be interested to hear peopleís actual returns if they are regular contributors to these etfs to try and tease out the effect that timing, dollar cost averaging etc makes.

mjr

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Re: Actual returns from vanguard etfs
« Reply #7 on: October 15, 2019, 12:24:55 AM »
Do you have sharesight ?  If not, sign yourself up for a free account and you can do all the modelling you want.

marty998

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Re: Actual returns from vanguard etfs
« Reply #8 on: October 15, 2019, 01:23:40 AM »
Yes I guess that makes sense. If I made large purchases after the dividend record date I would consistently miss this. For vhy which has limited capital growth this would be crucial. My out of super etfs where I contributed less but had a greater starting balance, had returns of 10.75 over the same period. I have had an addiction to vhy as it seems cheap for the dividends it returns compared to vas. I have been focused on dividends to avoid having to sell during a downturn to fund living expenses.  But recently vas has had very similar dividends and also has had the capital growth.

I've written a few times why I think VHY is rubbish. Basically it buys high and sells low - the index it is based on is a forecast dividend yield type thing adjusted to put caps on sector weights.

When it rebalances, it adds stocks that are forecast to have future high dividend payouts (i.e. by the time it buys them the share price has more than likely risen a bit), and it sells out of stocks that have cut their dividend (those stocks have in all likelihood already been punished by the market). It does this every 6 months, so there could be up to 6 months of missing out on gains or 6 months of pain experienced before it cleanses the portfolio.

An example of this which made me run away from it for good a few years ago was when it bought into BHP at about $30, sold out at $17 and missed the run back up to $30. You basically got smacked twice.

The performance comparison between VAS and VHY bears this out over the last 4 years. No point getting dividends if your capital goes down. If anything, if you bought in back then and kept reinvesting, dividends from VAS would likely be higher than what you get from VHY (I'm going to try and test this, gimme a day to do the maths).


mrmoonymartian

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Re: Actual returns from vanguard etfs
« Reply #9 on: October 15, 2019, 04:30:24 AM »
Are you kiwiozearlyretirement or ozkiwiearlyretirement? Maybe you are being taxed for excessive kiwiness.

4.3 Withholding tax Ė non-Australian residents
If you are not an Australian resident for tax purposes and are entitled to taxable income of the iShares ETF, the Manager may withhold an amount of tax in respect of your distribution. You may be entitled to a credit for Australian income tax paid by the Manager in respect of your tax liability. Distributions to you of amounts attributed to Australian franked dividends will not be subject to withholding tax. Any distribution of unfranked dividends, interest or amounts in the nature of interest will, however, be subject to withholding tax. This is irrespective of whether distributions are paid in cash or reinvested as additional units. Further, any distribution of other Australian income or capital gains from assets that are Taxable Australian Property will be subject to withholding tax. The rate of tax will depend on whether the iShares ETF is eligible for AMIT status and your country of residence or address. Your Distribution Payment Advice from Computershare will show the net amount in Australian dollars of any distribution. It will also show the rate and amount of any withholding tax deducted (if applicable) from your distribution payment in Australian dollars. Electronic copies are sent by email on the afternoon of the payment date. Hard copies are posted on the evening of the payment date.


That is from Blackrock not Vanguard, but a kiwitax may be a kiwitax regardless.

What does your Distribution Payment Advice advise?

ETFwatch gives the same gross figures as Vanguard.
http://www.etfwatch.com.au/2019-financial-year-etf-lic-performance-report/
http://www.etfwatch.com.au/2018-financial-year-etf-lic-performance-report/

marty998

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Re: Actual returns from vanguard etfs
« Reply #10 on: October 15, 2019, 03:15:40 PM »
As promised. Attached is the maths for identical investments in VAS and VHY from 1 January 2015 to present day:

$100,000 starting investment (1552 units of VHY and 1463 units of VAS)

Dividends received: VHY $35,566.32, VAS $24,485.17

End value: VHY $129,558.60, VAS $151,282.60

There's a clear winner there.

JimmyMac

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Re: Actual returns from vanguard etfs
« Reply #11 on: October 16, 2019, 07:00:18 AM »
The performance figures issued by vanguard are based on net asset value and are audited.
Apart from tax issues, you could expect some variance due to the amount you actually paid (bid/ask spread) and the management fees for the funds themselves.

kiwiozearlyretirement

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Re: Actual returns from vanguard etfs
« Reply #12 on: October 25, 2019, 07:48:08 PM »
Thanks Marty,

Yes at the time I started investing VHY had performed better than VAS since inception and I was seduced by getting the dividend cash rather than capital growth to help fund us till super is accessible. But as you say the events of recent years with BHP etc meant it has underperformed. I have started buying more VAS. I'm still not sure about betashares. I read quite a good article comparing VAS and betashares and it reckoned although the management fees are lower in betashares (0.07) than vas (0.10) the buy sell spread was higher in betashares so you are actually better off with VAS. I guess it depends how often you are buying and selling. I guess most of us yet to FIRE are buying a lot now and then selling a lot in the future.

In reply to mrmoonymartian I am an oz tax resident so pay oz tax. The tax appears to be 15% but come to think of it a small portion is my concessional and I had to pay division 293 so that took another $3-4000 out.