Now could be an opportune time to run the rule over the Vanguard Australian Shares Index ETF (ASX: VAS) and Vaneck MSCI Australian Sustainable Equity ETF (ASX: GRNV). Using our internal quantitative analysis, these ETFs appear to offer strong exposure to the Australian shares sector.
Getting to know the GRNV and VAS ETFs
The Vanguard VAS ETF provides exposure to the largest 300 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.
Note: you can continue learning about the GRNV ETF on our report page. ASX GRNV report.
To make this article easier to digest, we’ll just study the fees or ‘management expense ratio’ (MER). Using data for December 2020, the VAS ETF has an MER of 0.10% while the GRNV ETF had a yearly fee of 0.35%. As a result, VAS comes out on top. Keep in mind, a more insightful 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 put 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.
Let’s look at the past results. 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 strong return one year just to generate weak 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 VAS ETF had an average annual return of 8.24%. During the same time, the GRNV ETF returned 8.42%.
Best ETFs Takeaway
In summary, the VAS ETF rates better for our internal scoring methodology but not by much compared to GRNV.
Please, keep in mind, there is much more to choosing 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…