Every week I go live on YouTube to answer your ETF questions. This week I used the new ReviewETF tools to answer them on screen: checking overlap, comparing performance and looking at what actually drives an ETF. Here are the key points. Each button jumps the video to that part.
- Choose one diversified core (DHHF, VDAL, VDHG or VDGR) and add a few satellites. Adding NDQ, VGS, IVV or A200 to DHHF mostly doubles up on what you already own.
- Be in satellites in a base or an uptrend, never in a downtrend. SEMI has been in a downtrend since mid-year.
- Gold miners (GDX, MNRS), silver miners and copper miners are close to setting up, more likely December than now.
- Don’t chase yield: SWTZ has returned about 3% a year over five years.
- More satellites isn’t better: two or three on $30,000, no more than ten even on $1 million.
1. New: see what you really own with the Portfolio X-ray
I started the live by showing the new ReviewETF. You can enter everything you hold, including shares you own directly, and the Portfolio X-ray breaks it all down: performance against DHHF and A200, overlap between your ETFs, fees and cheaper alternatives, estimated income by month, and a free PDF report with your top 50 companies by dollar value.
There are now 514 ETFs on the ASX and TMX Australia. You can browse by theme or commodity (gold, silver, gold miners, Bitcoin and more), and look up which ETFs hold a company like BHP or Nvidia. I used these tools to answer most of the questions below, live.
2. Selling SEMI to buy FGX? You’d be swapping a satellite for a core
Jason asked about selling SEMI (semiconductors) to buy FGX, the Future Generation Australia listed investment company (LIC). A few things to weigh up:
- They do different jobs. SEMI is a satellite: one theme. FGX holds a wide range of fund managers, so it behaves more like a core holding. Moving from one to the other replaces a satellite with another core.
- LICs aren’t ETFs. There’s no market maker, so you trade against other buyers and sellers and big orders can be hard to fill. LICs can also trade above or below the value of their assets (the NTA). FGX was trading at about $1.30 against an NTA of $1.33, so close to fair value.
- Look at the numbers, not the marketing. Over five years, FGX returned about 5.7% a year. DHHF did about 9.2% a year, so a single diversified ETF has done better as a core.
I generally only buy LICs at a big discount. LRT, a resources LIC, is an example trading at a 25 to 30% discount to its assets. That can work well when the theme turns.
3. When to get out: nothing good happens below the 200-day
The reason to be cautious on SEMI is simple: it has been in a downtrend since about June or July. It made a base, broke out, ran hard, then broke down through its moving averages and the 200-day. Nothing good happens under the 200-day.
XMET earlier this year is the example of handling it well. We bought out of the base, took some profits near the highs, added back, then sold as it broke down through its base. That meant we missed months of gut-wrenching chop. You want to be in an ETF in a base or an uptrend, never in a downtrend.
Satellites need managing. Anyone who bought SEMI or South Korea early this year made a lot, but much of it has been given back by people who didn’t take profits. How the base and trend method works →
4. Gold miners: GDX, MNRS and SLVM are close, but not yet
GDX (global gold miners) made a higher low, which is a good sign, but it needs to get back above the 200-day and its other moving averages. MNRS is the same gold miners with the currency hedged, and I’m leaning that way because the Australian dollar has been weak. Silver miners (SLVM) look much the same but are more volatile.
All three are high on our watch list, more likely a buy in early to mid December than now. If they break their lows instead, that just sets up a better entry later.
5. Copper miners and resources: waiting at the bottom of the base
WIRE (copper miners) is in a big base, like most resources, including BHP. Copper itself has moved a lot, but the miners haven’t. If WIRE holds its lows and starts creeping up, that’s an early entry; if it breaks down, it falls back to the next level. Hard assets have been forgotten this year after a big run last year. I still like the theme; it just needs time.
6. Adding NDQ to DHHF? You may be doubling up
NDQ is in a base after a huge run, with money moving into healthcare and more defensive areas. The bigger point is overlap. With $25,000 in each, NDQ and DHHF overlap by about 21%. Nvidia is about 8% of NDQ and already about 3% of DHHF, so you’re tilting harder into the same big tech names.
If you want more tech on top of a diversified core, pick a specific part of it instead: cybersecurity (HACK), semiconductors or robotics. Browse the technology themes on ReviewETF. Check your own overlap →
7. VGS or DHHF as your core?
My view: choose one diversified ETF as your core: DHHF, VDAL, VDHG or VDGR, depending on how much growth you want. Then decide your split. Conservative investors might go 90% core and 10% satellites; aggressive investors up to 50/50.
VGS and DHHF are both core-style funds and their holdings overlap by about 40%. Both have Nvidia and Apple at the top. Adding something like gold or resources to a core overlaps almost nothing, which is where satellites add real diversification.
8. Asia tech: IAA, ASIA and IKO are the same trade
If you’ve been stuck in IAA since June, look under the hood. IAA, ASIA and IKO have all been driven by the same few stocks: TSMC, Samsung and SK Hynix. About 50% of IKO is Samsung and SK Hynix, and around 30% of IAA is TSMC. Alibaba and Tencent are much smaller weights. If South Korea and semiconductors don’t do well, these ETFs are unlikely to either.
9. SWTZ and income ETFs: don’t chase yield
SWTZ has been one of the weaker funds on the market: about 3% a year over five years, despite a good dividend, because the income has come at the expense of capital. $10,000 invested five years ago is worth about $11,000 including distributions.
Better-performing income ETFs over five years include VHY, SYI and IHD. Browse the dividends and income theme on ReviewETF and sort by return. On monthly income: paying monthly adds costs, and I’d rather be paid quarterly by a good-quality fund.
10. A 60% IVV, 40% VEU core: what about Australia?
The two have almost no overlap and the mix has beaten DHHF over three years. The question is Australian exposure, which you don’t have. The Australian market is near all-time highs while the Nasdaq is about 15% off its highs, but our market is mostly banks and resources, and I don’t think the banks are great value. Rather than buying the whole Australian market, I’d consider resources, gold or energy as satellites when they start running.
11. Esports and gaming are on the watch list
ESPO and GAME were strong performers, gave it all back, and are now popping up out of a base. That’s potentially a stage one. Japanese gaming stocks like Bandai Namco are moving too. Worth watching.
12. The Market Health-O-Meter and when satellites come back
We haven’t had any satellite ideas because the Market Health-O-Meter has been red. It moved to neutral, and if it keeps improving we expect the first key ideas to set up within a week or two. We judge it by three things: the Health-O-Meter, the US risk-on/risk-off signal, and the number of ideas setting up. The progress gets made in the green periods, not the red.
For a late-40s beginner going 70/30 with a growth core, that’s exactly the right approach: start with a core, learn with a few satellites, and get comfortable with bases, uptrends, downtrends and stop losses.
13. Super, mortgage or investments?
It depends on your age. Super is by far the best structure for retirement savings, but the money is locked away. Pay down bad debt like a non-deductible mortgage first, especially as rates rise. Make use of concessional contributions, build your personal portfolio, and as you get close to retirement, move as much as you can into super. The ideal: house paid off, no debt, everything in super, drawing a pension.
14. Oil and FUEL: probably a story for next year
Oil has started to come off, but the chart is very V-shaped and needs rest. I think it moves higher next year, and FUEL (global energy, currency hedged) looks similar. Early to mid next year is more likely than now.
15. Morningstar ratings? Look at the chart and the numbers
I don’t use Morningstar ratings. The performance and the chart tell the story. On ReviewETF you can see whether a fund keeps up with its benchmark (DHHF is just under, mostly fees). HYGG is an example: a 200% run, then a choppy 30% base, and now 3.9% a year behind its benchmark over five years. If it’s not going up, I don’t want to be there.
16. US-listed ETFs: we don’t need them
With 514 ETFs in Australia, we can build a very good portfolio without going to the US, and avoid the extra tax issues. Australian ETFs also give you currency-hedged options that US funds don’t.
17. How satellites work for Lite members, and stop losses on Betashares Direct
Each week Lite members get our best two or three satellite ideas with the buy area and stop loss. Complete members get the full list, the model portfolio and trade alerts. Start with Lite, then move to Complete as your portfolio grows, usually from $50,000 to $100,000 or more.
Many Australian platforms don’t offer stop-loss orders, and I don’t recommend hard stops on ETFs anyway, because a bad price on the open can knock you out. Know your stop before you buy, set a price alert, and if it closes through the level you have the day to sell. These diversified funds rarely fall all day.
18. HACK and BUG: good satellites, too extended right now
Cybersecurity is a good long-term theme, but both moved straight up in a weak market. That V-shape needs to rest and form a better base, possibly a buy next year.
VTEC for 20 years? I couldn’t pick any satellite for 20 years. Tech was the place to be since the GFC, but resources and hard assets may be the place going forward. For 20 years I’d rather own a diversified core like DHHF or VDAL.
19. Healthcare: CURE is the one I’m watching
Healthcare has had a defensive bid and IXJ, DRUG and HLTH are all very V-shaped, so I’m not chasing them. CURE (biotech) is more interesting: about a six-month base and not extended, so it’s highest on my watch list.
20. How many satellites for a $30,000 portfolio?
Something like $24,000 in the core and two or three satellites. More isn’t better: with $1,500 in a satellite, doubling it barely moves your portfolio. A rough guide by portfolio size:
- $20,000: a core and one or two satellites
- $50,000: two to four
- $100,000: five to ten
- $1 million: still no more than ten, ideally six or seven
An 80/20 or 70/30 split is a good place to start until you’re more confident. Plan your core and satellites in dollars →
21. A Christmas rally?
Post-midterm years are usually strong, and we could still see a Christmas rally from around 10 December into January. Beyond that, news-driven volatility will continue, but money keeps flowing into shares, gold, silver, defence and oil, so there will be opportunities.
22. Keep adding to your core? And should you ever switch cores?
Hold the core through the cycle and keep adding. If you’re investing regularly and your balance is still small, keep buying through a correction, because you’re picking up more at lower prices. Retirees with a fixed nest egg need to protect it: if the core broke down through its base, we’d start trimming about 20% at a time to raise cash.
Switching from one diversified core to another rarely makes sense. If the US falls, Australia probably falls too. Changes are more likely to come through satellites. If you’re in super pension phase there’s no tax on switching; in your own name, think about capital gains tax and redirect new money instead.
23. 80% Australian financials in super? Be careful
Our banks look expensive and the economy is soft. In retirement especially, I wouldn’t want so much in one sector or one country. A 7 to 8% return is a good target for a pension. A simple approach: use the super fund’s diversified option (or DHHF) as your core and choose a few satellites, because cores miss things like gold and Bitcoin.
Investing for children: kids under 18 pay high tax on investment income, so invest in the lower-earning parent’s name and transfer it later.
24. DHHF, IVV and A200 together: all core, no satellites
This mix has done slightly better than DHHF, but the overlap is high: about 37% between DHHF and A200 and 35% between DHHF and IVV. I’d treat DHHF as the core and replace IVV and A200 with specific satellites you actually want.
And yes, Complete members still get a trade alert by email every time we buy or sell, and SMS alerts are coming soon.
25. Gold and silver: ETPMAG and GXLD
Silver is in a precarious spot, still in a downtrend. If gold and silver break their lows they’ll go lower before they bottom. The gold and silver miners are showing more relative strength than the metals, so I’m leaning towards the miners for now. Either way, precious metals belong in the conversation for your portfolio.
General information only, not personal advice. It doesn’t take into account your objectives, financial situation or needs. Returns are past performance as discussed in the live and are not a reliable indicator of future performance.