Switching ETFs: IVV to VGS or A200 to DHHF?

Question

I’ve been investing in A200 and IVV for a while, but changes in my weekly expenses and IVV’s higher unit price mean I’d need a decent chunk to keep adding.

I’m considering:
- Switching from IVV to VGS for a more affordable unit price.
- Stopping contributions to A200 and moving to DHHF instead, as the unit price fits better with my current budget.

What do you think?

I’m not too concerned about diversifying into extra companies—I’m happy with large caps and the additional volatility. I also don’t plan to sell for at least 20 years.

Cheers

Answer

Switching investment funds based on changes in your financial situation or to optimize for lower fees can be a sensible strategy, provided you’ve considered all the implications, including transaction costs and potential tax consequences.

Switching from IVV (iShares S&amp;P 500 ETF) to VGS (Vanguard MSCI Index International Shares ETF) could be a strategic move if you’re looking for a more affordable unit price and broader international exposure beyond the U.S. market. VGS offers a diversified portfolio that includes a mix of large-, mid-, and small-cap companies across developed markets worldwide, which might provide a more comprehensive international exposure compared to IVV’s focus on U.S. large caps.

On the other hand, moving from A200 (BetaShares Australia 200 ETF) to DHHF (BetaShares Diversified High Growth ETF) could also align with your goal of managing investment costs while maintaining a focus on high-growth assets. DHHF is a diversified fund that typically invests across various asset classes, including Australian shares, global shares, emerging markets, and bonds, but with a strategic focus on growth-oriented assets. This could potentially offer a broader exposure compared to the more focused Australian large-cap stocks in A200.

However, it’s important to consider the tax implications of selling your current holdings, especially if they have appreciated in value since you purchased them. Capital gains tax could apply, and this might reduce the net benefit of switching funds. Since you plan to hold your investments for at least 20 years, the long-term growth potential and the compound effect of lower fees could outweigh the initial tax costs, but this would depend on the specific figures involved.

Additionally, frequent switching between funds to chase lower fees or slightly better performance can lead to overcomplication of your portfolio, potentially increasing costs and making it harder to manage. It’s crucial to balance the desire for cost efficiency with the benefits of consistency and simplicity in your investment strategy.

Pearler focuses on long-term investing and offers features that could help manage and track your investments efficiently, aligning with your strategy of holding investments for the long term. Utilizing tools that assist in analyzing the long-term growth potential and cost implications of switching funds can be beneficial in making informed decisions that align with your financial goals.

In summary, your consideration to switch from IVV to VGS and from A200 to DHHF seems aligned with your objectives of managing costs and not being overly concerned about diversification into extra companies. Just ensure to weigh the potential tax implications and the benefits of simplicity in your investment approach. Pearler’s platform can support you in tracking these changes and planning your investments with a long-term perspective.

You can find out more about this topic here: Investment Fees

Disclaimer

I am an AI-powered chatbot and not a financial advisor. The information provided is for educational and informational purposes only and should not be considered as financial advice. Investing involves risks, and past performance is not indicative of future results. It is important to conduct thorough research and consider your own financial situation and risk tolerance before making any investment decisions. It is always recommended to consult with a qualified financial advisor or professional before making any investment decisions.

Answer

having both VGS &amp; DHHF will decrease your beta but if you wanted more growth instead of swapping IVV to VGS look at SPYG :)

Answer

Hi Emily.

It’s a reasonable thing to do since it meets your practical situation.

I guess the downside is your situation changes later and you want to go back to your previous setup, leaving you with additional funds in your portfolio.  So it can create some extra ongoing admin/complexity, something to keep in mind.

If you’re ok with that then switching to either a lower price per unit fund, or an all-in-one ETF seems like a perfectly sensible thing to do in this type of scenario.

All the best.

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