Is it time to review VLC and MVW ETFs?
If you are looking for the best ETFs this year, the Vaneck Australian Equal Weight ETF (ASX: MVW) and the Vanguard MSCI Australian Large Companies Index ETF (ASX: VLC) might be worthy of your watchlist.
Why investors study the Australian Equal Weight ETF and the MSCI Australian Large Companies Index ETF
The VanEck MVW ETF offers exposure to over 60 of Australia’s largest and most liquid equities, equally weighted. By balancing stocks, this ETF aims to reduce the risk of concentration in specific Australian stocks and sectors.
The Vanguard VLC ETF offers exposure to the MSCI Australian Shares Large Cap Index. This index is a “free float-adjusted market capitalization index” that provides investors with exposure to the largest companies in the ASX.
Do you want to know (a lot) more? Read Our Full VLC ETF Review: Check Out Our VLC ETF Review Now.
Obviously, an easy way to analyze any ETF or fund like VLC or MVW is to use quantitative methods, such as studying fees and past performance (keeping in mind that past performance do not guarantee future performance).
We’ll keep it basic and just study the fees. Based on our data for December 2020, the MVW ETF has a management expense ratio (MER) of 0.35%, while the annual fee for the VLC ETF was 0.20%. Hence, VLC wins on this one. That said, a more useful metric to know is the expense quartiles these ETFs fall into (note: Quartile 1 is best). For example, any ETF that has fees below 0.3% would be considered in our first (best) quartile.
As Jerry Maguire said, “show me the money”. Keep in mind that performance is not everything – and past performance is no guarantee of future performance. This is only part of a much larger picture. The reason we say performance isn’t everything is because of the volatility in the financial markets and the economy from year to year. Some ETFs and funds may generate a positive return one year just to generate lower returns the next time. That’s why we prefer the three or seven year track record over the one year track record. It can smooth out temporary performance caused by external factors. Both ETFs have met our three-year return target. In December 2020, the MVW ETF had an average annual return of 7.21%. At the same time, the VLC ETF returned 8.83%.
Finally, at Best ETFs Australia, we apply a rating to the issuer or provider of the ETF. That is, the company that starts up and is responsible for operating the ETF on the ASX. There are too many considerations that go into our notation to detail them here. MVW’s transmitter is Vaneck. VanEck is highly ranked for our scores of ETF providers and issuers in Australia. Our team considers VanEck to be one of Australia’s leading providers of ETFs and specialist funds for retail investors and advisers. The provider of VLC is Vanguard. Vanguard ranks very well among our many ETF providers and issuers in Australia. We consider Vanguard to be one of Australia’s top three ETF providers for retail investors, advisers and institutions.
Don’t forget our free reviews on ASX MVW and ASX VLC.
For us, the MVW ETF ranks quite better for our internal rating methodology, but not by much.
We hope this article has helped you analyze ETFs. Remember that there is much more to invest than what we have just described (risks, diversification, other potentially better ETFs, etc.). Our team of analysts at Rask Australia spend months researching new ASX investments (that’s our daily job!). To make your life easier, you can get the name of our team’s Top ETF Pick for 2021 in a free report. Read on to find out how to receive our analyst’s report by email now …