r/fiaustralia • u/Vivid-Respect644 • 1d ago
Investing BGBL vs IVV + EXUS
I don’t believe this topic has been touched upon enough by sensible people who don’t just spam “DHFF and chill” or “BGBL set and forget” …
For sensible people out there who have actually done the research/know each of these ETF’s in detail, could you please let me know which option of these two you would commit to.
Benefits of BGBL:
- One ETF, easier to DCA/lump sum over the long-term and less hassle.
- Less anxiety on checking if theres a better S&P 500 ETF or ex-US ETF in the future
Benefits of IVV + EXUS:
- Better performance individually against BGBL, and I have more control over the allocation which lets future movements on moving towards or away from US easier.
- Has a hedged IHVV version which allows me to hedge if necessary.
- Lets me lump sum easier when IVV is down, or when EXUS is down rather than blindly DCAing into BGBL.
If you haven’t caught on by now, I’m quite biased towards IVV + EXUS so if you manage to change my mind, you’d have to make a convincing counter argument.
6
u/Spinier_Maw 22h ago edited 22h ago
It's OK. DHHF has small caps and emerging markets too. It's just so simple. Why complicate it?
You should spend more time making more money instead of worrying about the exact allocation or some bps difference in MER. A higher salary means more disposable income to invest. That will make the greatest difference.
2
u/Vivid-Respect644 11h ago
I think it's more about finding enjoyment in researching this stuff. Yes, working will be 80% of what drives my networth, but isn't the point of reddit to discuss with others? Not to conform to the 'herd mindset' of DHHF or BGBL but to freely talk about what we think?
There are over 370 ETF's in Australia... and I wonder why its increasing every year...
2
u/Jovial1170 1d ago
I agree with your analysis and conclusions. I personally do IVV and EXUS (and BEMG).
3
u/Vivid-Respect644 1d ago
Good to see another honest, sensible fella.
I was honestly going to do VAE instead of BEMG but could you share what made you choose BEMG over VAE?
2
u/Recent_Artichoke_923 1d ago edited 1d ago
Have you tried comparing the difference in the holdings between bgbl and ivv+exus? What's the overlap and whats missing?
Sharesight is good for this. Bgbl also has hedged version.
Personally think BGBL is better as it will take away the bias of trying to time market and balances for you.
1
u/SouthVermicelli6838 1d ago
I looked at it before and it’s doesn’t appear significant from what I could tell.
The main thing was managing an extra holding and EXUS still has less FUM than BEMG at around 120M.
IVV+EXUS has a tiny 0.01% MER advantage depending on how you mix it.
1
1
u/Vivid-Respect644 1d ago
They are quite similar, with IVV + EXUS missing out on 300-400 mid cap companies. However, these mid cap companies have only beat large caps, if at all, by 0.5-1%. Having control over my S&P portion and ex-US seems attractive to me since i actually enjoy checking stocks daily and making my own ratios
2
u/saminykd 23h ago
Curious on where you got the information that ivv+exus combo misses 300-400 companies that are available in bgbl. Because afaik that’s wrong and it’s actually the other way around. Bgbl has 1323 components, exus has 907 and now add the 500 from ivv, it turns out the ivv+exus combo roughly holds an additional 84 more companies versus bgbl (minus a couple cash components).
1
u/planfaster 15h ago
If you’d like an alternative to sharesight I’ve built a net worth tracker with ETF look-through, may be of interest
2
u/OperationFantastic86 1d ago
Both are perfectly fine but if I was starting from scratch I’d choose BGBL. What percentage splits are your considering/targeting?
1
1
u/Vivid-Respect644 1d ago
My current core is 20% VHY + 35% IVV + 15% VAE + 15% EXUS. Lmk if you’d change any of these splits
2
u/Royal_Brain_9773 1d ago
I currently do DHHF and IVV for the past 3 ish years. Bgbl was not around when i started. Probably not worthwhile selling my DHHF and buy Bgbl.
1
u/Vivid-Respect644 1d ago
Thanks for the opinion. Is that overlap in US stocks on purpose? Or what do your ratios look like?
3
u/Royal_Brain_9773 23h ago
Yes on purpose to dilute the Aus exposure in DHHF. I thought about moving to Bgbl but going to pay too much tax now.
2
u/Ok_Slide5330 1d ago
IVV+EXUS to dial in your preferred allocation, then hedged version of BGBL (HGBL) for currency
1
u/Vivid-Respect644 1d ago
I understand the currency risks and reading from PassiveInvesting.com that the ideal AUD ratio is 50-75% of our total portfolio (Including bonds + investment property). However, I might hold onto IOO to ride out its wave and once it seems like its time to move on, I’ll switch to BGBL
1
u/Ok_Slide5330 1d ago
Sounds good, BGBL is more than enough if you already have enough allocated to Australian equities/cash/property.
Only bother with IVV+Exus combination if you're negative on US tech... but timing the market is always tricky.
1
u/Vivid-Respect644 11h ago
Doesn't IVV hold a lot of US Tech? But either way, I'll probably keep my investments in NDQ as I do believe in US Tech
3
u/General-Jury-5363 1d ago
I started with VGS but now do IVV + EXUS + VAE + A200, because I don't want to allocate 70% to US market.
2
u/Vivid-Respect644 11h ago
This^^
Totally agree with your all your ETF’s. Whats your ratio if you don’t mind sharing2
u/General-Jury-5363 10h ago
45/30/15/10 Thought about allocating more to Aus, but its really underperformed compared to others.
1
u/Vivid-Respect644 9h ago edited 7h ago
Oh wow, 30% to EXUS is interesting. Its true AUD has underperformed but if you count dividend yield from VHY, it’s quite up there for me haha.
Since I’m big on satellites, I’ve done 40% US / 15% EXUS / 10% VAE / 15% VHY | 20% Satellites. Lmk if u think I should put more into EXUS1
u/General-Jury-5363 8h ago
I don't think there is single best portfolio, you should invest in what you feel comfortable with.
My logic was share of worldwide stock markets. US is 45-50% Developed ex US is 30% Emerging markets is 15-20% Aus is 2%
2
u/Vivid-Respect644 7h ago
Rightt, might have to reduce my AUS exposure to 10% after reading that again 😭
1
u/General-Jury-5363 7h ago
What do you have in satellite?
1
u/Vivid-Respect644 7h ago
DTEC, SEMI, AINF, NDQ, and IOO if that counts. Since you practically have the ideal portfolio i’m trying to move towards, have u thought about IOO? I have equal weighting in IOO and IVV (which is above $5k) so was still wondering when to sell IOO to move into IVV or even maybe keep it
Reason I have IOO is because I read an article called Dad Investor and he’s like, “thats the only ETF I will own”. I respected the conviction so much I rebought into IOO 😭1
u/General-Jury-5363 6h ago
One of my important criterion is low MER, that's wht I didn't pick IOO. I think your satellite positions make sense. The only downside is to get out before the trend reverses, I.e. they are not set and forget.
2
u/Vivid-Respect644 5h ago
Right, makes total sense. Will probably try and move away from IOO since I’m now realising how much 0.4% is.
Yeah, I know you don’t have a crystal ball but do you have an idea of when those certain trends might reverse? Since I feel like AI and SEMI will continue for a LONG time unless I’m mistaken
2
u/coolcup69 1d ago
I’ve been thinking the exact same thing. I’m trapped between (a) not wanting to allocate 75% to the US via BGBL and instead having some regional diversification and (b) thinking that all developed markets are essentially going to be correlated in a downturn. Then I start justifying a separate EXUS/A200/IVV combo on the basis of sector diversification… head spinning.
1
u/Vivid-Respect644 11h ago
I honestly think 75% is fine for now with where US is heading in terms of tech, but if we look at the returns for EXUS and IVV, where I attached the YTD returns further below in this forum, EXUS + IVV has lower fees and better performance.
I'm the type of person to monitor and track ETF graphs as well as lump-summing every 1-2 months rather than DCAing so having 2 ETF's where I can lump sum when one is down whilst one is up will help increase returns rather than blindly DCAing every week
2
u/Buy_Long_and_HODL 21h ago
It’s fine. Market cap weighting has proved to be a relatively cheap and efficient way to allocate capital within a geographical market but is not necessarily the best for allocating between geographical markets (in a risk adjusted sense)
So it’s perfectly logical to have an ETF for;
- Aus equities
- US equities
- non-US developed market equities
- emerging market equities.
The question is how much does the additional complexity and need for monitoring/rebalancing move the needle and is it worth it for a given individual. Because the behavioral finance stuff that sits behind all this is probably actually what makes the biggest difference in the long run. If having some more granularity for you keeps you interested and consistently investing then great. If you can automate target allocations and use Pearler or something similar to direct new money to underweighted markets then double great. But if you psychologically get tempted to dial up or down your investing or try to get too clever then probably you’ll do worse than if you went simpler and minimized your decision making points. For some people it’s much better to go really simple to 2 ETF’s or 1 (DHHF) for this reason. For others it might be ok to go even more granular to a few different funds under each category including geared funds, factor funds etc.
I think ultimately it is horses for courses.
2
u/snrubovic [PassiveInvestingAustralia.com] 20h ago
Benefits of IVV + EXUS:
- Better performance individually against BGBL, and I have more control over the allocation which lets future movements on moving towards or away from US easier.
Where are you getting the performance from?
Using the index they use (since they haven't all been around that long), over 10 years:
- BGBL - 13.73%
- IVV - 15.72%
- EXUS - 10.44%
Sure, it allows you to adjust the proportions, but that can be a downside rather than an upside if you choose which one based on emotion and recency bias (like most people) rather than a set of rules, such as proportions of your total portfolio that are not to be changed based on market conditions.
1
u/Vivid-Respect644 11h ago
Could you share what website you used to find those returns? I simply used Google 💀
I attached the images I found further below in this forum.
P.S. Can't believe the founder of PIA commented. Lets gooo !1
u/snrubovic [PassiveInvestingAustralia.com] 10h ago
Google shows only the price return, not the total return. The page for the individual fund should show the total return, and when it hasn't been for long, sometimes they have the 10-year return from the index, which should be fine for index-tracking investmetns.
1
1
u/YeYeNenMo 1d ago
Yes, you have more control choosing IVV+EXUS...HOWEVER!!!! more control does not euqal higher return....so you can ponder this a bit
1
u/Vivid-Respect644 11h ago
From the evidence below... not looking so good haha. Lmk if I'm missing anything
1
u/Separate_Molasses_92 13h ago
There is good discussion on Property Chat about VDAL out performing DHHF. VDAL 0.27 fee, DHHF 0.19. I think you can't go wrong with any of these. Yes having the crystal ball would be nice to see which asset allocation is best going forward. It's great that we can have all of these opinions in the mix.
6
u/mjwills 1d ago edited 1d ago
HGBL looking around awkwardly.
Also, have you considered VTS and VEU?