From a crypto crusader to a superior sustainability index, these ETFs are some of the hottest predictions on the Australian sharemarket for the new year.
Aussie investors love ETFs. We love them so much we’re buying them to the tune of $125 billion, across more than 250 ETFs listed on the Australian Stock Exchange (ASX).
ETFs, or Exchange Traded Funds, offer investors a low-cost way to diversify their share portfolios through a range of indexes. It’s a passive investment strategy that’s proving irresistible to both new and experienced investors. You choose an index – or basket of shares or assets – based on factors like ESG (environmental, social and governance), particular sectors (such as tech-based equity funds), or market trends.
4 of Tui’s hot ETF picks for 2022
1. BetaShares Crypto Innovators ETF (ASX: CRYP)
Providing exposure to global companies at the forefront of the crypto economy.
Tui says: “My view on cryptocurrency and crypto ETFs, it’s like a growth stock or ETF, so most comparable is a tech sector out of the US. And I think now as investors, we need to have some sort of exposure to that asset class. So this is the first play into offering a crypto-based product for our customers and we do hope to expand that as well. We believe it’s going to be around for a long time.”
2. iShares MSCI World ETF (ASX:IHWL)
This index measures the performance of global, developed market large and mid-capitalisation companies with better sustainability credentials than their sector peers.
Tui says: “I see that as a global hedge on the global recovery out of COVID.”
3. Vanguard Australian Shares High Yield ETF (ASX:VHY)
Providing low-cost exposure to companies listed on the ASX that have higher forecast dividends relative to other ASX-listed companies.
Tui says: “I think that’s a really important ETF in the next 12 months for us, because obviously there’s inflation concerns. The Reserve Bank has also advised that they’re not lifting interest rates until 2024, so you’re going to see this transition from growth stocks still into high-yielding stocks. So I think that’s going to have a lot of importance over the next 12 months as part of people’s investing strategy.”
4. Shares AU Corporate Bond ETF (ASX:IAF)
This index measures the performance of the Australian bond market and includes investment grade fixed income securities issues by the Australian Treasury, Australian semi-government entities, sovereign entities and corporate entities.
Tui says: “It’s going to be an interesting play over the next 12 months. I think you’re going to get a lot more value out of blue-chip corporate bonds than treasury bonds.”
6 other ETFs on Jaaims
- iShares ASX 200 ETF (ASX:IOZ)
- iShares US S&P 500 ETF (ASX:IHVV)
- iShares MSCI Emerging Markets (ASX:IEM)
- iShares AU Treasury ETF (ASX:IGB)
- iShares Global Corporate Bond ETF (ASX:IHCB)
- Vanguard AU Property ETF (ASX:VAP)
“First things first – we’ve purposely selected only ASX-traded ETFs,” Tui tells us. “And we’ve been able to identify ETFs that give you global exposure, but they’re hedged to the AUD currency. So that alone obviously saves currency conversion risks – at the moment the dollar is dropping pretty quickly.
“Secondly, we chose ETFs that are comparable to the equities that we analyse, so that’s why you have the ASX 200, the US S&P 500, you also have the MSCI World ETF as well.
“So we’re identifying that these are the equities that the Jaaims algorithm trades, so you could say have 50 per cent exposure to the ASX200 ETF and have 50 per cent exposure to our Australian equity range, so obviously you’re getting diversification and the best of both worlds.”
Of course, as with all investments, make sure you’re fully aware of how they work and whether they’re the right types of investments for your level of risk.
A word of advice about ETFs
While ETFs will continue to be a popular investment strategy for many Australians looking for diversified exposure to multiple asset classes, Tui cautions investors from throwing all their eggs into the ETF basket.
“ETFs shouldn’t be a sole strategy, it needs to compliment you overall investing strategy,” Tui advises. “We’re really seeing a lot of pocket apps that are really just trying to push an ETF strategy on you. But we believe that is actually fraught with risk, especially in this environment with high inflation concerns, supply chain issues, and so on. Our perspective on them is that ETFs should be used as broader activity as part of your investment strategy.
“So with us, we’ve hand-curated 10 ETFs we think the customer should use to diversify with. So when you use Jaaims, you have an active equity strategy… supported by what you call a passive ETF strategy. Through our technology you can group them together, so you can have your active and passive strategy all in one platform.”
OK, what’s this Jaaims thing?
Jaaims, which launched in 2020, uses AI to analyse more than 10 million pieces of information daily across 250 news sources to derive buy and sell recommendations across 1000 stocks. As Australia’s first fully automated investing app, Jaaims aims to fast-track the research process for time-poor investors and give quick access to stock recommendations, portfolio building and stock trading from your phone.
“It’s definitely to save all that time researching,” Tui adds. “With the Jaaims platform, we analyse the stocks just like a fundamental analyst would. Our system ingests all the current news on a daily basis – it also reviews price changes, valuation metrics, and then it determines a rating every 15 minutes based off that data.
“With our technology, we do all that for you, so you don’t have to read a Morningstar or InvestorNote. We’re already capturing all this information globally and then using that to analyse a stock recommendation.”
Jaaims publishes quarterly results to benchmark its performance. “In the first 12 months we returned 26.25 per cent, so we beat our benchmark by 16 per cent,” Tui says. “Then this year we’re on track to beat the 10 per cent target as well.”
Whether you’re buying equities or ETFs or both, join Jaaims for free here to give it a go.
This article is brought to you by Your Money & Your Life in partnership with Jaaims.
The information above is intended to be general in nature and is not personal financial product advice. Before acting on any information, you should consider the appropriateness of the information provided and the nature of the relevant financial product having regard to your objectives, financial situation and needs. You should seek independent financial advice prior to making an investment decision in relation to a financial product (including a decision about whether to acquire or continue to hold). Pinstripe Media and Jaaims are not liable for any loss incurred by use of or reliance on the information.