Question 1: I am looking at investing in an index fund. Between Vanguard’s VHY and the A200 from Betashares, which one do you think is the better investment for growth and dividends?
Answer (by Paul Rickard): Vanguard’s VHY (Vanguard Australian High Yield ETF) tracks the FTSE Australian High Dividend Yield index. This index comprises stocks that have higher forecast dividend yields relative to other ASX listed companies. There are 64 stocks.
The total return of the index in 2019 was 20.88%, underperforming compared to the S&P/ASX 200 accumulation index by 2.52% (this returned 23.4%). Accordingly, the ETF returned 20.83%.
Betashares A200 ETF tracks the Solactive Australian 200 Index. A less well known index, this is an index of 200 shares. It is fairly similar to the S&P/ASX 200. In 2019, the index returned 23.33% and the ETF 23.19%.
In regard to index tracking investments, If your priority is income, I would go for VHY. If your priority is “growth and dividends”, I wouldn’t go for either of these ETFs but instead opt for Vanguard’s VAS, which tracks the broader S&P/ASX 300.
Question 2: NBI (the NB Global Corporate Income Trust) are offering a 3 for 4 entitlement at $2.05 per unit. What is your view ?
Answer (by Paul Rickard): I am a reasonable fan of these products and am an investor in the NB Global Corporate Income Trust (NBI). I consider them as part of the “risky fixed interest” component of my portfolio.
Critically, they do invest in non-investment grade corporate bonds. Further, while this is a very well diversified trust (comprising more than 300 individual bonds) and has a great manager in Neuberger Berman, manager diversification may also be a consideration.
In regard to the particular offer (a 3 for 4 entitlement):
- It is at an offer price of $2.05 per unit. The last quoted NTA is $2.05 per unit;
- This year’s target distribution is 5.25% pa, paid monthly. This is likely to fall in 20/21 to around 4.75%; and
- The offer closes on February 21.
Question 3: How can I find out when a company is due to report its profit? Is there a calendar?
Answer (by Paul Rickard): Most companies publish on their website (under the Investor Relations tag) a schedule of events or a financial calendar. This will show indicative reporting dates. Often, they will put out an announcement to the ASX a week or so ahead confirming the date, time and webcast information (the latter, a webcast of the results presentation and Q&A session with the broker analysts).These are open to the public – you can watch the webcast!
Some brokers publish a calendar for the earnings season. CommSec’s is here: https://www.commsec.com.au/content/dam/EN/ReportingSeason/February2020/CommSec_Reporting_Season_Calendar_February2020.pdf [1] ; Bell Direct’s is here: https://www.belldirect.com.au/smarter/reporting-season [2]
Important: This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. Consider the appropriateness of the information in regard to your circumstances.