We recently crunched some numbers in our database and found that Vaneck MSCI Australian Sustainable Equity ETF (ASX: GRNV) and Betashares Australia 200 ETF (ASX: A200) ranked better than most ETFs in the Australian shares sector.
So what do they do?
For a diversified portfolio of sustainable Australian companies, the VanEck GRNV ETF may be of interest. This ETF focuses on Australian companies that have high environmental, social and governance (ESG) performance, based on MSCI ESG Research. GRNV has been certified by the Responsible Investment Association Australasia (RIAA), as part of the Responsible Investment Certification Program.
The Betashares A200 ETF provides exposure to the largest 200 Australian companies, based on market capitalisation. Unlike many other Australian shares ETFs, A200 uses the Solactive Australia 200 Index. This is virtually the same thing as the indices provided by S&P/ASX, as it also uses a market capitalisation weighting.
If you want to go beyond the basics with the GRNV ETF you can learn more about it by reading our free review.
Obviously, an easy way to analyse ETFs like A200 and GRNV is by using quantitative methods and judging the fees and past performance (note: past performance is no guarantee of future performance).
At Rask Australia and Best ETFs, our team scores ETFs and funds based on the management fees and we take into account the buy-sell spread and other costs. We’ll then compare these ‘all in’ fees and costs across sectors, strategy types and providers to get a sense of fees across the entire market.
To make this article easier to digest, we’ll just study the fees or ‘management expense ratio’ (MER). Using data for December 2020, the GRNV ETF has an MER of 0.35% while the A200 ETF had a yearly fee of 0.07%. So, A200 wins on this metric. Keep in mind, a more useful metric to know is the fee quartiles that these ETFs find themselves in (note: quartile 1 is best). Meaning, we take all the Australian shares ETFs in our database and divide them into 4 quartiles, based on their fees. For example, any ETF which has a fee below 0.3% would be considered in our first (best) quartile.
Performance is important. 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 good return one year just to generate poor 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. GRNV had notched up a three-year average annual return of 8.42% in the period through December 2020. At that time, however, the A200 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!).
Now we need to scrutinise the issuer or provider of the ETF. There are too many factors that go into our internal scoring of fund providers to detail here — here’s the quick version: As you guessed, the issuer of the GRNV ETF is Vaneck. VanEck ranks highly for our scores of ETF providers and issuers in Australia. Our team considers VanEck to be one of Australia’s leading providers of specialised ETFs and funds for retail investors and advisers. A200’s provider is Betashares. Betashares ranks highly for our scores of ETF providers and issuers in Australia. We believe BetaShares is one of the leading providers of index and non-index style products to retail investors in Australia.
For us, the A200 ETF rates more compelling against our internal scoring methodology, but only just.
We hope this article helped you analyse ETFs. Don’t forget, there’s a lot more to investing well than what we just outlined (risks, diversification, other potentially better ETFs, etc.). Our analyst team at Rask Australia spends months looking at new ASX investments (it’s our day job!). To make your life easier, you can get the name of our team’s top ETF pick for 2021 in a free report. Keep reading to find out how to get our analyst’s report emailed to you right now…