A look at Vanguard VAP and the VETH ETF
The Vanguard VAP ETF provides investors with low-cost exposure to listed Australian property companies and real estate investment trusts (REITs).
The VETH ETF tracks the FTSE Australia 300 Choice Index and attempts to provide low-cost exposure to Australian shares, with an ethical filtering process to exclude shares of companies from particular industries and those which have demonstrated ‘severe controversies’.
Learn more about the VETH ETF with our full analysis page. Get our VETH review.
So where do we start analysing VETH and VAP? In addition to using our years of experience analysing ETFs to ‘get a feel’ for the ETF, there are simple checks and balances our team uses to compare similar ETFs.
The first is fees. We score ETFs based on their management fees and costs and we take into account the spread. We’ll then compare these ‘all in’ fees and costs across sectors, strategy types and ETF providers.
We’ll keep it straightforward and just study the fees. Based on our data for July 2022, the VAP ETF has a management expense ratio (MER) of 0.23% while the VETH ETF’s yearly fee was 0.17%. Therefore, VETH wins on this one. 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.
Track record
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. VAP had notched up a three-year average annual return of 1.49% in the period through July 2022. At that time, however, the VETH 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!).
There’s one more important thing to consider: the company that starts and runs the ETF. They are in charge of operating the ETF on the ASX. The issuer for both of these ETFs is Vanguard, so we can’t say one is better than the other. However, using the FUM of the ETF can be a strong indicator of the ETF provider’s commitment to an ETF. Vanguard ranks highly for our scores of ETF providers and issuers in Australia. We consider Vanguard to be in Australia’s top three ETF providers for retail investors, advisers and institutions. had total funds invested (FUM) of $2,283.54 million and VETH had $405. million.
Next steps
To keep reading about these two ETFs, be sure to visit our free VAP ETF report or VETH ETF review.
In summary, the VAP ETF rates better for our internal scoring methodology but not by much compared to VETH.
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 2024, keep reading…
