TOL - 18th Mar, 2024
Buy Hold Sell: Your top-tipped ETFs for 2024
In this episode, two financial advisers run the ruler over readers' favourite exchange traded funds.
There are now more than two million Australians using exchange-traded funds (ETFs) to invest, an increase of 7% compared to 2022 (according to Betashares).
As of the end of February, there was $189.4 billion invested across 359 ETFs, and with BlackRock estimating the market could more than double by 2027, it seems there's no stopping the explosive growth of the low-cost, easily accessible ETF market.
So in this episode, Livewire's Ally Selby was joined by Shaw and Partners Adam Dawes and DP Wealth Advisory's Andrew Wielandt for their analysis of Livewire and Market Index readers' top-tipped ETFs for 2024.
For most of your ETFs, our financial advisers provide similar calls - but there's one in particular that has them divided - and it's a doozy.
Note: This episode was recorded on Wednesday 13 March 2024. You can watch the video, listen to the podcast, or read the edited transcript below.
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Edited Transcript
Ally Selby: Hey, how are you doing? And welcome to Livewire's Buy Hold Sell. I'm Ally Selby, and today, we'll be analysing your top-tipped ETFs, or exchange-traded funds, for 2024. To do that, we're joined by Shaw and Partners' Adam Dawes and Andrew Wielandt from DP Wealth Advisory.
This episode is a little longer than usual. We'll be analysing 10 exchange-traded funds. So, let's get straight into it. First up, we have the Betashares NASDAQ 100 ETF, the code is NDQ. Adam, I'm going to start with you today. Is it a buy, hold, or sell?
Betashares NASDAQ 100 ETF (ASX: NDQ)
Adam Dawes (BUY): I think it's a buy. I think overall it's a tough one because of where we are with this market, and certainly all those NASDAQ stocks and those technology stocks, but the reason why I still like it is that I think technology stocks still have further to go. There are still a lot more earnings upgrades going forward. Plus, some of these other ones that we're going to talk about are staples in client's portfolios. So, for me, it's a buy.
Ally Selby: This one will cost investors around 48 bps per year. Andrew, over to you. Is it a buy, hold or sell?
Andrew Wielandt (BUY): Ally, it's a buy, but with a similar disclaimer or get out of jail card that Adam just gave. It's had a "ripper" of a year, that's a technical finance term for those playing at home. And to your point around those earnings upgrades, it's trading on around 30 times earnings, or the index is trading on 30 times earnings, but the earnings forecast is around 30 times as well. So, even though it's punchy, the EPS or the earnings forecast is also punchy. So, on balance, it's a buy.
Vanguard Australian Shares Index ETF (ASX: VAS)
Ally Selby: Next up we have a very popular one. It's the Vanguard Australian Shares Index, or VAS as it's very commonly known. Andrew, staying with you, is it a buy, hold or sellAndrew Wielandt (BUY): So, VAS would be a buy. That's pretty simple. It's a passive ETF. It's actually following the ASX 300 as opposed to the ASX 200. And Vanguard's rationale, as I understand it, is that you're trying to capture some of those smaller companies. And it's been driving around 0.2% per annum additional return relative to the ASX 200. So, if you look at VAS's fees from memory, it's around seven basis points. From my point of view, it's a core holding. It's a buy.
Ally Selby: Okay. Over to you, Adam.
Adam Dawes (BUY): I agree as well. I think it's a buy. It is a core holding. You might want to pick 15-20 stocks in a portfolio, but you're not going to get the ASX 300 in that. So, it's a great way to capture the rest of the market by putting one ETF in the portfolio. So, really happy with it. It's low cost. It's Vanguard, so there's lots of liquidity in there, and it just tracks the market. So, it's a good one.
Betashares Global Cybersecurity ETF (ASX: HACK)
Ally Selby: Okay. Next up we have more of a thematic ETF. It's the Betashares Global Cybersecurity ETF. Staying with you, Adam. Is it a buy, hold or sell?Adam Dawes (HOLD): This one's a hold for me. I've had a little bit of trouble with this one. I would've thought it would have done better than it has - with the Medibank and Optus [data breaches] - I thought that it would take off. It's very much an international ETF, so it does have a lot of those bigger cybersecurity businesses in there. But for me, it's been a little bit disappointing, so I'm just going to say a hold on that one because I do feel that cybersecurity is going to be important going forward.
Ally Selby: It's also quite expensive. It will set investors back around 118 bps per year. Andrew, over to you. Is it a buy, hold or sell?Andrew Wielandt: So, Adam and I normally align, but today my friend, not so.
Adam Dawes: That's okay.Andrew Wielandt (BUY): It is a buy. And as we're going through [this episode], I'll talk about some of the ones I hold in my self-managed super fund. This is one of them. In fact, this is one of the first ones I bought because of all the reasons you outlined. And as a small business owner, I look at my IT costs and they've tripled over the last three years. Now, I'm just one little business in regional Australia, but you can't tell me that other businesses around the country aren't facing that. And to all the points you raised before - it's certainly fully priced, there's no doubt about that. But as a mega-trend or as a thematic, the bad guys and girls are not going away, sadly, and we need to protect ourselves. HACK is a buy.
VanEck MSCI International Quality ETF (ASX: QUAL)
Ally Selby: Okay, next up we have the VanEck MSCI International Quality ETF. Andrew, is it a buy, hold, or sell?Adam Dawes: You don't like that one, do you?
Andrew Wielandt (BUY): The one ETF to rule them all, ladies and gentlemen. It's a ripper! It's an absolute... Sorry, family-friendly - it's a very good one. From my point of view, it's the top 200 quality businesses around the world, out of a universe of 1,543. High return on shareholders' funds, steady to increasing revenue, and steady to decreasing debt. It's got Nvidia in there, which is helping, of course. It's about 40% tech, so you need to be mindful of that. It's up 40% for the year. It's another one of the core holdings in my self-managed super fund. Out of all the ones we're going to talk about today, it's probably the one I'm most certain about. It's a buy.Ally Selby: Okay. This one's also quite cheap. It'll cost investors around 40 bps per year. Over to you, Adam. Is it a buy, hold or sell?
Adam Dawes (BUY): I'm going to agree with my learned colleague there and say it's a buy. It's a core portfolio holding for all of our clients. I'm very happy to switch out some other international ETFs that clients might have that are a little bit off the reservation - we put them into that and they're very, very happy. QUAL is a buy.iShares S&P 500 ETF (ASX: IVV)
Ally Selby: Okay. Next up today we have the iShares S&P 500 ETF. The ticker is IVV. Adam, staying with you, is it a buy, hold or sell?
Adam Dawes (BUY): Again, this one is a buy. I mean, hopefully, we get some "sells" on this list. But, IVV's fantastic. It really gives you that broad depth. Everybody talks about the Dow Jones. Everybody talks about the NASDAQ, but really it's the S&P 500 that drives the market, and it is the broader market as well. It's a great way to get access to it. It's not hedged, so you have to worry about that currency moving forward. But IVV is a classic and a staple in anybody's portfolio. It's a buy.Ally Selby: Okay, that one is incredibly cheap. I think BlackRock only charges investors around four bps per year.
Adam Dawes: Wow.Ally Selby: Over to you. Is it a buy, hold or sell?
Andrew Wielandt (BUY): It's pretty easy. It's also a buy. It's the top 500 companies in the US economy. So, if you're a believer in the US economy and with due respect to the US, there are a few moving parts there at the moment, but if you're a believer in the 340 million consumers going out and doing their thing every day, then IVV is absolutely the way to do it. You've absolutely nailed it relating to the hedging piece. So, we just need to be mindful of that - ASX: IHVV, if you're worried about the Aussie dollar, but I'm very comfortable with IVV. It's a buy.VanEck Morningstar Wide Moat ETF (ASX: MOAT)
Ally Selby: Okay, next up today we had the VanEck Morningstar Wide Moat ETF. Andrew, staying with you. Is it a buy, hold or sell?
Andrew Wielandt (BUY): It's a buy-a-thon today, Ally. Another one that I have in my self-managed super fund. There is a hedge version, ASX: MHOT, from memory. I'm quite comfortable with it being unhedged at the moment. So, as the name suggests, it's buying businesses with a wide moat. It's rules-based, so in other words, particular rules determine what makes up a moat, and it's only 15% tech. So, some of the other ones we've just been talking about, like QUAL, are 40% tech. To me, it's almost like a barbell. I've got MOAT on this side to help defray that heavy tech exposure they've got on QUAL on this side. But again, it's performed incredibly well. So, it's a buy.Ally Selby: This one has management fees of 49 bps per year. Over to you, Adam. Is it a buy, hold or sell?
Adam Dawes (HOLD): It's probably a hold from me. I'm not a huge fan of Morningstar and it's their index that they're using. It's a big business that goes into that. Just a little bit cautious on this one. It has had a fantastic run, so it has done very, very well. And we like businesses with great moats on them as well. So, I think they're capturing a little bit of that. But, I think it's a hold. I've got clients in it. They've done very, very well. I like the idea of less tech exposure because we've got too much tech in our portfolios. Yeah, a little bit cautious up here from where it is and it's a hold.Global X Fang+ ETF (ASX: FANG)
Ally Selby: Okay. Speaking of tech exposures, next up we have the Global X Fang+ ETF. Adam, is that one a buy, hold or sell?
Adam Dawes (HOLD): So, what was the original FANG? It was Facebook, Amazon, Netflix and Google. So, that was the original theme that they went with that. They've obviously got all of those in there and Nvidia's in there as well and those kinds of things. Again, I think this one is a good one. It'd be a hold for me as well. I think there might be some pullback in that tech space, albeit we've just talked about how great it's been. I just think that it might pull back a little bit halfway through this year, which might give you the opportunity to get into this one. I'm just feeling it's a little bit hot in a thematic ETF that we talked about, and I think that you could probably do a little bit better. So, it'd be a hold from me. And if you hold it, I'd probably take some profits.Ally Selby: This one will set investors back around 35 bps per year. Andrew, over to you. Is it a buy, hold or sell?
Andrew Wielandt (BUY): It's a buy, and my simple brain rationale is if I said that the Nasdaq was a buy, then this should be a buy as well. But with due respect to Adam, what he didn't say, but he inferred, was that there's not a lot of healthcare exposure in there. So, if you think about the Nasdaq, heavy in tech, heavy in healthcare - that's potentially why that's a buy, without trying to put words in his mouth. Whereas, this is more tech-focused. And as we've said, it's certainly a frothy valuation. So, if I put the Adam lens on it, I understand where you're coming from. But simple brain Andrew says, if I think the Nasdaq is a buy, this is a subset of that. A lot of common names in there. It's very heavy on Nvidia, and that's obviously a big theme coming across a number of these ETFs today. So, if you're worried about Nvidia, forget everything that we've said, just throw it all out the window. But if you think AI and chips are the way of the future, then certainly FANG and a number of these ETFs remain a buy.
Vanguard Australian Shares High Yield ETF (ASX: VHY)
Ally Selby: Okay, we're still going. Next up we have the Vanguard Australian Shares High Yield ETF. Andrew, is that one a buy, hold or sell?
Andrew Wielandt (HOLD): This one's a bit tougher. I think it's probably a hold at these levels. It's paying a 5.06% dividend for those playing at home and pays quarterly. It's full of banks and banks have just had a ripper of a run, absolute ripper. That said, it's also got resources and resources are off by around 15% for the year. So, on balance, I think it's a hold, but certainly, for people looking for that steady, predictable income, 72 high-yielding companies, rules-based, doesn't hold REITs, doesn't hold listed property trusts. But, from an income perspective, in particular, given that bank bias, it's a bit warm at the moment. It's a hold.Ally Selby: Okay, that one will cost investors around 35 bps per year in fees. Over to you, Adam. Is it a buy, hold or sell?
Adam Dawes: This one would be a hold to a sell. And we've had other ETFs that do the same thing, like Harvester, all those kinds of things. It gives away income for expensive capital, and so you just have to be a little bit careful with these ones. Because of that, the price is doing really well, but then you're getting the income, but then sometimes that price does fall, and then you get caught into this dividend trap. And certainly, something like a BHP at the moment, which it will have in there, those dividends we know are going lower for the next two to three years. So, I think it's a hold, because obviously, it has the thematic of income, so that's what you're getting. But I think that income will come at the expense of capital, and that could be a problem going forward. So, just be a little bit cautious on that one.Ally Selby: Okay. I'm going to push you for a call - a hold or a sell. What one would it be?
Adam Dawes (SELL): I'm going to say sell. The only reason is the expense of capital. I think you've just got to be cautious, and I think you can find some better dividend-paying stocks out there.Global X Physical Gold ETF (ASX: GOLD)
Ally Selby: Next up today we have the Global X Physical Gold ETF. Adam, nearly there. Is that one, a buy, hold or sell?
Adam Dawes (BUY): This one's a buy. It's commodity-based, so it's not company-based, so it's not company-driven, so that takes a lot of the risk out of it. It does invest in gold. Gold's had a fantastic run and will continue to do well in these uncertain environments that we're seeing around there by war, higher interest rates, all of those kinds of things. It's about a 5% weighting in most of my client's portfolios. We did struggle a couple of years ago when it really wasn't doing that well, but now everything's started to move and it's a great defensive asset in there as well. So, it's a buy.Ally Selby: Okay, this one has management fees of 40 bps per year. Andrew, over to you. Is it a buy, hold or sell?
Andrew Wielandt (BUY): It's a buy. And well done to you for getting your clients to have a percentage allocation to that, because again, some clients go, "No dividend? Ahh." But if you think about the diversification piece, to your point around all the unusual things happening in the world, you didn't mention, of course, our friends in the US and that coming into year-end, you definitely want something that's not necessarily correlated to share markets, or going to move around with share markets, so that's a really easy one. That's a buy.Betashares Global Uranium ETF (ASX: URNM)
Ally Selby: Last up today is the Betashares Global Uranium ETF. It's been incredibly popular over the last year. The ticker is URNM. Andrew, last one for you. Is it a buy, hold or sell?
Andrew Wielandt (SELL): Save the best for last, Ally. It's a sell. It's run incredibly hard over the last 12 months. It's up about 55%. The spot uranium price is starting to come off at the moment, there are a few reasons behind that. The US is not sanctioning the Russian excess weapons-grade uranium coming through, so the market didn't take that news too well. We were talking earlier about thematic ETFs and sometimes you've got to know when to fold them and run. This is a time to run, so it's a sell.Ally Selby: Do you agree, Adam? It costs around 69 bps per year. Would you be buying, holding, or selling URNM?
Adam Dawes (BUY): No, I disagree. I'm going to go the other way. I think it's a buy. I think that overall uranium has had a horrible 20 years. It's now only now starting to come back into the limelight. We are looking forward to the energy transition. Uranium is the cleanest fuel going forward. Uranium has had a fantastic run. I can't disagree with that, but we are continuing to buy it. The spot price of uranium is at $100 and our analysts think it could get to $150 next year. We're really bullish on uranium, so it's a buy from me.Ally Selby: Okay. Well, I hope you enjoyed that episode of Buy Hold Sell as much as I did. If you did, why not give it a like? Remember to subscribe to our YouTube channel. We're adding so much great content just like this every single week.
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Buy Hold Sell is a weekly video series exclusive to Livewire. In each episode two fund managers give their views 'Buy, Hold or Sell' on five ASX listed companies. Not recommendations, please read the disclaimer and seek advice where appropriate.
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Livewire Markets
Buy Hold Sell is a weekly video series exclusive to Livewire. In each episode two fund managers give their views 'Buy, Hold or Sell' on five ASX listed companies. Not recommendations, please read the disclaimer and seek advice where appropriate.
Expertise
Livewire Markets
Buy Hold Sell is a weekly video series exclusive to Livewire. In each episode two fund managers give their views 'Buy, Hold or Sell' on five ASX listed companies. Not recommendations, please read the disclaimer and seek advice where appropriate.
Expertise
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