What are the iShares IOZ and Vaneck GRNV ETFs designed to do?
The iShares IOZ ETF provides exposure to the largest 200 Australian shares, based on market capitalisation. This is a low-cost way to access top Australian companies through a single fund.
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.
For more information on the IOZ ETF, see our ASX IOZ review.
We’ll keep it basic and just study the fees. Based on our data for December 2020, the IOZ ETF has a management expense ratio (MER) of 0.09% while the GRNV ETF’s yearly fee was 0.35%.So IOZ comes out on top. That said, a more useful metric to know is the fee quartiles that these ETFs find themselves in (note: quartile 1 is best). For example, any ETF which has a fee below 0.3% would be considered in our first (best) quartile.
As Jerry Maguire said, ‘show me the money’. 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 positive return one year just to generate inferior 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. Both ETFs have achieved our three-year performance hurdle. As of December 2020, the IOZ ETF had an average annual return of 7.77%. During the same time, the GRNV ETF returned 8.42%.
Okay, one final thing. Let’s talk about the company responsible for the ETF. There are too many factors that go into our internal scoring of fund providers to step through in this article. The provider behind the IOZ ETF is iShares. iShares ranks highly for our scores of ETF providers and issuers in Australia. We consider iShares to be among the best ETF providers in Australia and globally. . Meannwhile, GRNV’s provider 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.
In summary, the GRNV ETF ranks more positively against our internal scoring methodology but not by much compared to IOZ.
Please, keep in mind, there is much more to zeroing in on a good ETF. That’s why you should now use these skills to find the best ETF you can. If you want the name of our team’s top ETF pick for 2021, keep reading…