CHOOSING INVESTMENTS
VESG vs VGS
Hello! I am new to investing and was looking into buying a few different ETF's and was wondering what the general consensus is when choosing VESG or VGS. They both have the same management fee of 0.18% p.a but VGS is way more popular. I understand that because VESG does an ethical screening it is less diverse in that respect but unless I've misunderstood something in terms of the number of holdings it's 1636 vs 1465 so VESG has more companies and both have the same general investment strategy. I would also assume that because VESG does a screening against certain companies such as those related to fossil fuels or those directly or indirectly exposed to controversial conduct it would be more likely to do better over the next 10 years? Any thoughts would be appreciated :)
Sienna Archer.
19 January 2023
1 Comments
over 1 year ago
Hey Sienna.
You just pointed out something really interesting. I hadn’t noticed that VESG has more companies in it than VGS. That’s actually quite strange. It looks as though even despite having a similar general investment strategy, they are tracking a different index which has been made up to meet the ESG criteria.
Nobody can say which one will perform better over the next ten years. It depends on whether the companies which have been ‘screened out’ do better than the index or not. But regardless, I would invest based on the fund you’d rather invest in for the next 30 years rather than which one ‘might’ have the best performance over the next ten. If you have a preference for ethical filters, then that might be the way to go. If you don’t mind either way, maybe the simpler option is better (simpler in terms of just a plain index with no additional rules or filters applied).
Hope that helps and all the best with your investing!
Dave
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