On the hunt for top ETFs in July 2021? Time to try IOZ & VAP?

Now could be an opportune time to run the rule over the iShares Core S&P/ASX 200 ETF (ASX: IOZ) and Vanguard Australian Property Securities Index ETF (ASX: VAP). Using our internal quantitative analysis, these ETFs appear to offer good exposure to the Australian shares sector.

Getting to know the VAP and IOZ ETFs

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.

The Vanguard VAP ETF provides investors with low-cost exposure to listed Australian property companies and real estate investment trusts (REITs).

Note: you can continue learning about the VAP ETF on our report page. ASX VAP report.

a gif of 4 etf reports

To make this article easier to digest, we’ll just study the fees or ‘management expense ratio’ (MER). Using data for December 2020, the IOZ ETF has an MER of 0.09% while the VAP ETF had a yearly fee of 0.23%. As a result, IOZ comes out on top. 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 analysis

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. 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 VAP ETF returned 6.07%.

Best ETFs Takeaway

To keep reading about these two ETFs, be sure to visit our free IOZ ETF report or VAP ETF review.

In summary, the VAP ETF ranks better against our internal scoring methodology but not by much compared to IOZ.

Please, keep in mind, there is much more to picking 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…

$50,000 per year in passive income from shares? Yes, please!

With interest rates UP, now could be one of the best times to start earning passive income from a portfolio. Imagine earning 4%, 5% — or more — in dividend passive income from the best shares, LICs, or ETFs… it’s like magic.

So how do the best investors do it?

Chief Investment Officer Owen Rask has just released his brand new passive income report. Owen has outlined 10 of his favourite ETFs and shares to watch, his rules for passive income investing, why he would buy ETFs before LICs and more.

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