Editors note (27/11/19): This article has been updated to include more details of the products and an update on the status of W200.
BetaShares is listing a suite of multi-asset ETFs, in a bid to claim territory from Vanguard.
The four new ETFs are tailored to different risk appetites. The riskiest ETF - called “high growth”- will mostly hold shares. While the least risky ETF – called “conservative income” – will mostly hold bonds.
The ETFs will mostly use other BetaShares-owned ETFs as a way of accessing shares and bonds. BetaShares will then rebate the underlying ETF fees. However, the funds can also use other companies ETFs, in places where BetaShares might not own an ETF themselves.
BetaShares Diversified High Growth ETF (90% shares, 10% bonds and cash)
BetaShares Diversified Growth ETF (70% shares, 30% bonds and cash)
BetaShares Diversified Balanced ETF (50% shares, 50% bonds and cash)
BetaShares Diversified Conservative Income ETF (25% shares, 75% bonds and cash)
The funds will charge 0.26%, one basis point cheaper than Vanguard’s multi-asset ETFs. They will also have different holdings, and include property and cash in distinction to Vanguard.
Multi-asset ETFs are popular with direct investors and with some – usually smaller – financial advisors. They provide a one stop shop for building portfolios and give investors access to several index funds in a single trade.
They make it easy to run a “core and explore”, investing approach. This is where the “core” of an investors portfolio is in safe cheap index funds – such as today’s listings – while the “explore” part of the portfolio takes more risk or expresses investors’ preferences.
Analysis – commoditised, just like their underlying funds. And by the way, what happened to W200?
When I saw these listings, my first question was: what happened to the BetaShares Global Blue Chip Titans ETF (W200)? W200 was sort of listed on the ASX in August 2018. I say “sort of” because while the paperwork was all done and dusted, and while Bloomberg says the fund is pending, the fund – 15 months later – is yet to trade.
I ask because it would have made a lot of sense to stick W200 in these new ETFs. It would have allowed BetaShares to build multi-asset funds exclusively using house products, and rebate all the underlying ETF fees. But without W200, BetaShares is potentially missing a piece.
The other thought, for me, is: what room is there to resist fee compression on this type of fund? If the Canadian experience is any guide, these types of plain vanilla multi-asset ETFs get commoditised very quickly – just like their underlying ETFs. On this score, BetaShares under-pricing of Vanguard is instructive.
Then again, Australia might be different.
Update: BetaShares have indicated that they have put a pause on listing W200 due to how the Australian ETP market has moved.