Buy Hold Sell: 5 ETF bargains to refresh portfolio in FY23

They say the end of the financial year is the best time to grab a bargain, and like your favorite retailer, the market just happens to offer a few deals right now.

Since the start of the year, the S&P/ASX 200 has fallen more than 12%, while the S&P 500 has flowed nearly 20% into the red. Properties – both commercial and residential – are also feeling the heat as interest rates continue to rise.

Given the challenges of identifying companies that can succeed in this challenging market environment (or any market, for that matter), exchange-traded funds, or ETFs, have emerged as a popular bet among investors.

So in this episode, Ally Selby of Livewire joins Felicity Thomas of Shaw & Partners and Sarah Gonzales of Apt Wealth, who share their thoughts on three low-cost ETFs to give your portfolio a much-needed facelift in FY23.

Plus, they mention one defensive ETF that could help boost the portfolio over the coming months.

Note: This video was shot on Wednesday 6 July 2022. You can watch the video, read the transcript or listen to the podcast below.

Edited transcript

Selby Allies: Hey, how are you? Welcome to Livewire Hold Buy and Sell. I’m Ally Selby and I don’t know about you, but I like haggling. And like your favorite retailer, the market just happens to offer some financial year-end deals right now. Today, we are talking about low-cost ETFs, which actually trade at a discount. To do that, we’re joined by Felicity Thomas of Shaw and Partners and Sarah Gonzales of Apt Wealth.

First off today’s ranking, we have the SPDR S&P/ASX 200 ETF. It’s down nearly 15% this year compared to the benchmark 13%. Felicity, I might start on you. Is it buy, hold or sell?

SPDR S&P/ASX 200 (ASX: STW)

Felicity Thomas (HOLD): I’ll hold back for now because I think there could be some more downside for the ASX 200. But then again, everyone needs to have an ASX 200 ETF in their portfolio and it’s definitely a good dividend. So hold on for now.

Selby Allies: This one has around 4.2 billion assets under management and is very cheap. The management fee is only 0.13% per year. Sarah, to you. Is it buy, hold or sell?

Sarah Gonzales (HOLD): Yes, I agree. This is also a hold for us because compared to its peers, 0.13% is quite expensive. For example, I prefer exposure to the iShares S&P ASX 200 ETF (ASX:IOZ), a similar index, but at 0.09%.

iShares Global 100 ETF (ASX:IOO)

Selby Allies: Next to today’s ranking we have the global iShares 100 ETFs. This gives investors exposure to the 100 largest companies in the world. Stay with you Sarah, is it buy, hold or sell?

Sarah Gonzales (BUY): For me, this is a purchase. I quite like this ETF. It provides exposure as you would say to the top 100 blue chip companies in the world and much of their revenue is global. So you get exposure not only to different countries but also the income.

Selby Allies: This one has a management fee of around 0.4% and is down about 14% since the start of the year. Felicity, to you. Is it buy, hold or sell?

Felicity Thomas (BUY): I will be the same as Sarah, this is a purchase. The reason is because it holds Apple, Microsoft, Google and Amazon, all 20% off. I think when we have the rebound it’s going to happen a lot quicker than people expect. We’ll have a bit of volatility in the meantime, but when a rebound hits you don’t want to miss out.

Vanguard Australian Property Securities ETF (ASX: VAP)

Selby Allies: Lastly for the day we have the Vanguard Australian Property Securities Index ETF, which tracks the performance of the ASX 300 A-REIT index. It has approximately $2.29 billion in assets under management. Felicity, to you. Is it buy, hold or sell?

Felicity Thomas (HOLD): I would say hold on now. The reason is because with rising interest rates, you may not want to be in property. However, I hold back because they pay good distribution and that’s every three months.

Selby Allies: The management fee for this one is around 0.23%. That’s down about 23% this year. Sarah, to you. Is it buy, hold or sell?

Sarah Gonzales (SELLING): This is actually a sale for me. I find that our property market is quite concentrated. I mean, in this ETF, the top five make up 50% and the top 10 make up 70%. So for that, I think it sells. You get your REIT exposure with the Vanguard Australian Shares Fund (ASX:VAS). So I think it’s my preferred choice.

Vaneck MSCI International Quality ETF (ASX: QUAL)

Selby Allies: I’m very excited for this. We asked our financial advisors to bring us one low cost ETF that could really refresh your portfolio in FY23. I might start with you, Sarah, what have you brought us today?

Sarah Gonzales (BUY): My ETF of choice is the VanEck MSCI International Quality ETF. I think that gives exposure to that quality factor, which tends to outperform in a downturn in the market. It focuses on factors such as returns and equity, year-over-year revenue growth as well as debt levels. It is a proxy for a firm’s profitability, earnings variability, and debt level. Especially if we’re going into a recession, I think this is a factor I think we should focus on.

ETFS S&P500 High Yield Low Volatility ETF (ASX:ZYUS)

Selby Allies: For you Felicity. Your turn in the hot seat, what low-cost ETF do you think could help refresh investors’ portfolios in FY23?

Felicity Thomas (BUY): I also went with a defensive theme. I really like the ETF Securities High Yield Low Volatility ETF. Basically, I really like their methodology. They looked at the top 75 high-quality businesses and they took only the top 10 high-yielding companies per sector, and they removed the 25 most unstable. It has names like Craft, IBM, and Verizon and also pays for quality distribution. And I think everyone is looking for a defensive result at the moment.

Selby Allies: Well that’s all we have time for today. We hope you enjoyed that episode of Buy Hold Sell. If you do, why not give it that way. Remember to subscribe to our YouTube channel, we add so much great content every week.

---

Can’t get enough of Buy Hold Sell?

Give this wire a Like if you enjoy the discussion and press follow to be notified when new episodes are released.

If you are not a Livewire customer yet, you can sign up for free access to investment ideas and strategies from leading Australian investors.

#Buy #Hold #Sell #ETF #bargains #refresh #portfolio #FY23