Buy Hold Sell: 5 bargain ETFs to refresh portfolios in FY23

Buy Hold Sell

Livewire Markets

They say the end of the financial year is the best time to snap up a bargain, and just like your favourite retailer, the market happens to be offering quite a few deals right now. 

Since the beginning of the year, the S&P/ASX 200 has fallen more than 12%, while the S&P 500 has cascaded nearly 20% into the red. Property - both commercial and residential - also is feeling the heat as interest rates continue to rise. 

Given the challenge of identifying the 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, Livewire's Ally Selby was joined by Shaw & Partners' Felicity Thomas and Apt Wealth's Sarah Gonzales, who shared their thoughts on three low-cost ETFs to give your portfolios a much-needed facelift in FY23. 

Plus, they name one defensive ETF that could help bolster portfolios over the months to come. 

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 

Ally Selby: Hey, how are you doing? Welcome to Livewire's Buy Hold Sell. I'm Ally Selby and I don't know about you, but I love a bargain. And just like your favourite retailer, the market happens to be offering quite a few end-of-financial-year deals right now. Today, we're talking about low-cost ETFs, ones that are actually trading at a discount. To do that we're joined by Felicity Thomas from Shaw and Partners and Sarah Gonzales from Apt Wealth. 

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


Felicity Thomas (HOLD): I'm going to put a hold at the moment because I think there could be some more downside for the ASX 200. But again, everyone needs to have an ASX 200 ETF in their portfolio and obviously a good dividend. So hold for now.

Ally Selby: This one has around 4.2 billion in assets under management and it's really cheap. Its management fees are only 0.13% per annum. Sarah, over to you. Is it a buy, hold or sell?

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

iShares Global 100 ETF (ASX: IOO)

Ally Selby: Next off the ranks today we have the iShares global 100 ETF. It provides investors with exposure to 100 of the biggest companies in the world. Staying with you, Sarah, is it a buy, hold or sell?

Sarah Gonzales (BUY): For me, it's a buy. I do quite like this ETF. It provides exposure as you said to the top blue chip 100 companies in the world and a lot of their revenue is global. So you do get exposure not only to different countries but also to those revenues as well.

Ally Selby: This one has a management fee of around 0.4% and it's down around 14% since the beginning of the year. Felicity, over to you. Is it a buy, hold or sell?

Felicity Thomas (BUY): I'm going to be the same as Sarah, it's a buy. The reason being is that it holds Apple, Microsoft, Google and Amazon, all off 20%. I do think that when we have the rebound that it's going to happen a lot quicker than what people expect. We're going to have a bit of volatility in the interim, but when the rebound happens, you don't want to miss out.

Vanguard Australian Property Securities ETF (ASX: VAP)

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

Felicity Thomas (HOLD): I'm going to say hold right now. The reason being with rising interest rates, you may not want to be in property. However, I'm holding because they do pay a good distribution and it's quarterly.

Ally Selby: The management fee on this one is around 0.23%. It's down around 23% year to date. Sarah, over to you. Is it a buy, hold or sell?

Sarah Gonzales (SELL): It is actually a sell 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's a sell. You do get your REIT exposure with the Vanguard Australian Shares Fund (ASX: VAS). So I think that's my preferred option.

Vaneck MSCI International Quality ETF (ASX: QUAL)

Ally Selby: I'm really excited for this. We asked our financial advisers to bring along one low-cost ETF that can really refresh your portfolio in FY23. I might start on you, Sarah, what have you brought for us today?

Sarah Gonzales (BUY): My preferred ETF is the VanEck MSCI International Quality ETF. I think it provides exposure to that quality factor, which tends to outperform in market downturns. It does focus on factors like return and equity, year-on-year growth of earnings and also levels of debt. These are proxies for profitability, earnings variability, and the level of debt of companies. Particularly if we are going into a recession,  I think these are really the factors that I think we should focus on.

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

Ally Selby: Over to you Felicity. Your turn in the hot seat, what's the low-cost ETF that you think can help refresh investors' portfolios in FY23?

Felicity Thomas (BUY): I'm also going with a defensive theme. I really like ETF Securities High Yield Low Volatility ETF. Essentially, I really like their methodology. They look at the top 75 high-quality businesses and they only take 10 high-yielding companies per sector, and they remove the 25 most volatile. It's got names like Craft, IBM, and Verizon and also pays a quality distribution. And I think everyone's looking for defensive yield at the moment.

Ally Selby: Well that's all we have time for today. We hope you enjoy that episode of Buy Hold Sell. If you did, why not give it a like. Remember to subscribe to our YouTube channel, we're adding so much great content every week.

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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.

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