Buy Hold Sell: 3 ETFs for bulls, 3 for bears

Buy Hold Sell

Livewire Markets

The VIX is uncharacteristically calm at the moment. Since rocketing to an all-time high of 82.69 in mid-March - which was its highest level since its inception in 1990, by the way - the index which tracks future expectations of volatility has since taken a tumble, falling nearly 80% to around 17.

However, as much as we have bulls running, the bears are still at large in equal numbers. To consider the prospects of both beasts, Buy Hold Sell has lured Shaw and Partners' Adam Dawes and VFS Group's James Whelan to share their thoughts on three exchange-traded funds for bulls and three for bears. 

As of the end of February, there were 215 ETFs listed on the ASX, with the market cap of these funds increasing by 52.6% over the past 12 months. Average transactions increased by 151.5% over the same period.

And, as Livewire Markets' Bella Kidman says, with six ETFs in the spotlight there truly is "something for everyone" in this BHS special. 

Note: You can watch, read or listen to the discussion below. This episode was filmed on 31 March 2021.

Edited Transcript

Bella Kidman: Welcome to Buy Hold Sell, brought to you by Livewire Markets. My name is Bella Kidman and welcome to today's ETF special. As of February 2021, there were 215 Exchange Traded Products listed on the ASX. There is truly something for everyone, and to prove it to you today, we're going to be talking three ETFs for bulls and three ETFs for bears. And to help me discuss these, I'm joined by James Whelan from VFS Group and Adam Dawes from Shaw and Partners. 

Adam, I'll start with you and we'll start on the bullish side. First off, BetaShares ETF Tech Tigers, Asian region. This is obviously giving investors exposure to the biggest tech names in Asia. Buy, hold, or sell?

Betashares Asia Technology Tigers ETF (ASX:ASIA) 

Adam Dawes (BUY): Well look, it's a buy from me. I think that the Asia thematic is absolutely fantastic. And this one has got a really good exposure to China. So, you are really going to get a lot of that, Hong Kong as well. So, you get your Tencent's, those kinds of things in this one, I think it's a buy.

Bella Kidman: James, we've got bulls, we've got bears, we've got tigers. I feel like I'm in the zoo. Buy, hold, or sell on ASIA?

James Whelan (SELL): I have to be a sell on ASIA, unfortunately.

Adam Dawes: He's a bear.

James Whelan: It depends. I'm a sell on ASIA. I didn't want to be, but the portion that's in that BetaShares ETF, which has got the Chinese tech exposure (worries me). I think the Presidency and the CCP just looking to crack down on some of those companies. I don't know when that's going to stop. If that's a known unknown, I can't be a buyer of that stock.

Vanguard MSCI Australian Small Companies Index (ASX:VSO)

Bella Kidman: Okay, let's go Aussie. The small-cap index has just run very hard. Vanguard Small-Cap ETF, capitalising on this. Buy, hold, or sell?

James Whelan (SELL): I have to be a sell as well on this one. I think that everything has run up beautifully for small-caps. And now with rates rising, it might start to tweak some of their margins a touch. I think that there are some other active managers that may be a little bit better where you'd want to have it. So, for this one, just with regards to the index, I have to be a sell.

Bella Kidman: Adam, this ETF has been up 60% in the last 12 months. Has it got more room to run? Buy, hold or sell?

Adam Dawes (BUY); Well, I'm going to disagree with James. I think it's a buy. 

James Whelan: That is a surprise.

Adam Dawes: And the reasons why, is that I use it as a portion of my client's portfolios. Now, it might be only 5% of the client's portfolio, but I don't have one, the time, the activity that these guys have in that small-cap space. They know what they're doing, right? So, I would rather employ a small-cap manager - a good MER on this one - but, a small-cap manager to manage 5-10% of my client's portfolio to get a little bit more. So, we've been investing in this one for a long time and I think it's a fantastic one. So, it's a buy from me.

BetaShares Geared Australian Equity (ASX:GEAR)

Bella Kidman: Okay. Mr. Bull, it's time to put your money where your mouth is. We've got the leveraged ETF, it's BetaShares Geared ETF. Buy, hold, or sell?

Adam Dawes (HOLD): It's a hold for me. I know I'm sitting on the fence on this one and James is shaking his head. Look, anything leveraged, I'm really, really, really cautious about. How can I consciously put an 80-year-old client into something like this when she really doesn't understand the underlying issues of leveraging and what goes on? But, it does sit in a portion of client's portfolios. So, it's a hold to a sell, from me.

Bella Kidman: James, this is up 80% in the last 12 months...

Adam Dawes: You can't have a sell on all three!

James Whelan: Why not? There's no rules or law against it. I'm wondering how Shaw Stockbroking manages to have a 180% allocation in clients' portfolios. You have to not have some stuff in there.

Bella Kidman: All right. Buy, hold, sell on GEAR?

James Whelan (SELL): I've got to be a sell, just for the same thing. I'd be a hold, but he said, "Hold." So, there you go. But, I've got to be a sell on this one, because it is leveraged. It does add a little bit too much exposure, there's a rotation that's going on right now. I think everything has run a little bit too hot. I don't want to be left two times negative then just run one time. That's the best explanation that I've got.

BetaShares Australian Equities Bear Hedge (ASX:BEAR)

Bella Kidman: Okay. Well, I've got one for you, hopefully. It's BetaShares Bear ETF. Now, this is designed to go up when the market goes down and down of course when the market goes up. Buy, hold, or sell?

James Whelan (SELL):  There's only been one time in the last 18 months when I've been short this market. And that was late February last year, with everything that was going on with the pandemic. I'm a sell on this one because I don't want to hold it. I've got an expression which says that: "You're either in, or you're out." Don't be short, because government money, stimulus checks, everything that goes into the market, keeps everything propping up. So, I can't physically be short this market, but I just can't hold it.

Bella Kidman: Adam, the market hasn't rewarded the Bears really. Buy, hold, or sell on this one?

Adam Dawes (SELL): This one is a sell for me, also. It doesn't have a Delta of one-to-one. Let's say the market goes down 10 points, it'll only go up by nine. It doesn't have a one-to-one Delta. So, there is slippage and you don't get the actual movement; if you buy options, or whatever. You don't get the full value of the stock market going lower for the BEAR ETF to go higher. So, it's not one for me. And again, I'm not short this market. 

ETFS Metal Securities Australia (ASX:GOLD)

Bella Kidman: Sure. Well, next up we have ETF Securities Gold ETF. Giving investors access to physical gold. Buy, hold, or sell?

Adam Dawes (BUY): It's a buy for me. Absolutely, it's a buy, everybody! This one is basically, we use it as a commodity aspect. Now, gold has certainly been on the nose, over the last three months. 

James Whelan: Really? 

Adam Dawes: And we like to put 5%, not anymore, 5% of our client's portfolios into GOLD. I think this is one that takes out all the company risk. It just basically looks at the overall gold commodity and I think GOLD will come back into favour and it will have its time to shine. So, I think it's a buy for me. 

James Whelan: That was awful. 

Bella Kidman: GOLD's come off a bit recently, but could be getting back to where it was. Buy, hold, or sell?

James Whelan (BUY): GOLD is a buy. Get a 5% allocation into it. I'll go with Adam on this one. I'm going to go with myself on this one too. Get a foothold in it now, add to it as it dips down lower or add to it as it goes up. But, eitherway start with an allocation to GOLD now, inflation is coming. We all will disagree about that. Gold is your hedge on that.

VanEck Emerging Inc Opportunities Active ETF (ASX:EBND)

Bella Kidman: Okay, last up we have VanEck Emerging Markets Debt ETF. A growing area of the market. Buy, hold, or sell?

James Whelan (SELL): I'm a sell on this one too. Wow, okay. Turns out I'm actually quite bearish. The US Dollar going up is not good for Emerging Market debt. And I know that this ETF doesn't have as much of an allocation into the spaces that are going to get hurt, but as a rule, the US Dollar is rising and it will continue to rise through 2021. So, Emerging Market debt is more difficult for them to raise debt and pay it back in US Dollars.

Bella Kidman: It's definitely one to diversify a portfolio. What do you say to this ETF? Buy, hold or sell?

Adam Dawes (HOLD): So, I think bonds or debt is a portion of a client's portfolio. You need to have that as part of strategic asset allocation of a client's portfolio. So, I think there are better ones out there. So, it's a hold from me. If you've got it, I'd still hold onto it, but I wouldn't take any new positions in it. Due to the fact, there are other ones that I think have better access and better income and that are better for that Emerging Market debt.

Bella Kidman: Whether you're a bull, a bear or even a tiger, there is something for everyone, don't miss out on this golden opportunity. If you enjoyed this episode, make sure you subscribe to Livewire's YouTube channel.

What ETF are you loving? 

Is there an ETF that you think other investors on Livewire should be aware of? Let us know the ETF and your reasoning behind it in the comments section below. 

Can't get enough of Buy Hold Sell?

Give this wire a like if you've enjoyed the discussion or hit follow to be notified when we release more episodes.

If you're not an existing Livewire subscriber you can sign up to get free access to investment ideas and strategies from Australia's leading investors. 

Livewire gives readers access to information and educational content provided by financial services professionals and companies (“Livewire Contributors”). Livewire does not operate under an Australian financial services licence and relies on the exemption available under section 911A(2)(eb) of the Corporations Act 2001 (Cth) in respect of any advice given. Any advice on this site is general in nature and does not take into consideration your objectives, financial situation or needs. Before making a decision please consider these and any relevant Product Disclosure Statement. Livewire has commercial relationships with some Livewire Contributors.

2 contributors mentioned

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.

I would like to

Only to be used for sending genuine email enquiries to the Contributor. Livewire Markets Pty Ltd reserves its right to take any legal or other appropriate action in relation to misuse of this service.

Personal Information Collection Statement
Your personal information will be passed to the Contributor and/or its authorised service provider to assist the Contributor to contact you about your investment enquiry. They are required not to use your information for any other purpose. Our privacy policy explains how we store personal information and how you may access, correct or complain about the handling of personal information.