She's On The Money - The 5 ETF's that returned the MOST in 2021

Episode Date: January 11, 2022

Today we're talking about the 5 ETF's that returned the most in 2021, because 2022 is the year we are going to become fluent in the language of investment together! Now before you dive right in, it’s VERY important to note that any episode we do on investment is NOT advice, but rather an open-ended conversation. Just because we discuss a particular product and its performance or underlying assets, does not mean we recommend it - you’d need personal advice for that - the purpose is for you to be even more educated, so you can have more informed conversations and make more informed decisions more often.Thanks to Superhero for helping us bring this episode to life! Check them out at https://superhe.ro/pr/sotm22 and they'll shout you a FTEC ETF when you fund your account with A$100 or more in your first 30 days. The advice shared on She’s on The Money is general in nature and does not consider your individual circumstances. She’s on The Money exists purely for educational purposes and should not be relied upon to make an investment or financial decision. Victoria Devine is an Authorised Representative of Australia Pacific Funds Management Proprietary Limited ABN 34 132 463 257 - AFSL 339151.See omnystudio.com/listener for privacy information.

She's on the money. She's on the money. Hello and welcome to She's on the money, the podcast for millennials who want financial freedom. The She's On The Money podcast has been around since 2019 and we have covered everything in my personal opinion from how to save to all the different types of asset classes you can invest in to what an estate plan actually is but something we haven't done deeply is discuss investment products and what they are because I really wanted you to focus on the foundations

first. However, my friends, 2022 is the year that we are going to become fluent in the language of investment together. Now, before we dive right in, it would be a miss of me to not introduce my co-host, Sam. Sam Blacker, welcome to the Wednesday Deep Dive episode. Hello, I've donned my wig. I am filling in for Jess. Thank you for having me. You are so welcome. Look, sorry to anyone who was expecting Jess's voice and have been very disappointed with hearing mine. Unfortunately, things got a bit iffy with the recordings and Jess is unavailable and

so I'm stepping in. Hello. It was actually a bit of a, what would we call it, a She's On The Money garbage fire where I forgot to turn on my microphone when recording with Jess last week. And this episode is being recorded the day before it goes live with Sam. So, cheers to Sam, who's actually our podcast producer from the Podcast Butler. So, Sam, you're kind of a part of the show. You're just like a background member.

Yeah, it's weird to be on this side. Welcome to Front of House. This is how it goes. Our podcast is an absolute garbage fire. Not in reality, but this week you've come onto the show not to talk about a fluffy episode. I don't know how you're going to deal with this because Jess took Jess a good 12 months to get used to talking about investment products and you've just been thrown in the deep end. Yeah. And the other thing is that there is the episode that you recorded with her,

like there's the mystery episode no one will ever hear of the whole detailed ETF stuff. It's never going to be heard. And Jess asking really good questions. But you know what? You've had a bit of a skim of what Jess asked. You saw her side of the conversation. So, before we get into it and have this conversation, which I'm genuinely so excited to have a conversation about, And I just want to talk more investing. So she's on the money might become she's on the investment in 2022, but that is okay. But before we get there, I think it's really, really important that we actually disclaimer this episode. And I know that we always do this at the end,

but at the end of the day, the conversations we have on this podcast are absolutely not advice, but rather they are an open-ended conversation because we want to discuss particular products and the performance and the underlying assets. But just because we do that on this podcast does not mean I necessarily recommend it. You'd need personal advice for this. And the purpose of this podcast is actually for you to be more educated so you can have more informed conversations and make more informed decisions more often. So just because I mentioned a particular ETF does not mean by any stretch of the imagination that I recommend it or that I want you to go invest in it or that I would even do that myself. It's just a conversation, especially today where we're

talking about the top five performing ETFs of 2021. It's literally just statistics that got them there. So, without further ado, Sam, would you like to talk about ETFs or exchange traded funds? I'd love to. The first thing is also you guys have done a whole episode on ETFs as well, if people are wondering what the hell they are. We absolutely have. So, before we dive in, if you are thinking WTF is an ETF, I would go back to that episode. It is in our mini investment series about all different types of investment assets that you can invest in. 2022 is the year that we take She's On The Money to the next level when it comes to talking about money and investment and everything related to She's On The Money. So if you haven't listened to our first few seasons,

you might be a few steps behind, but that is okay if you want to still listen. I will still have you, my friend. So, before we get into talking about what the top five ETFs were, let's just talk about ETFs in general. So, over the last 12 months, some pretty serious money, Sam, has flowed into Australia's ETF industry. In fact, according to our friends at the ASX, the market cap, or the amount the industry is worth, has grown nearly 44%. So, the industry is now worth $132.8 billion as at the end of November last year. It's a few dollar-oos. Just a couple. Just a couple of dollar-oos. And according to ETF Tracker, which is a website that I frequent

quite often, financials, property, and technology-focused ETFs generated the best returns so far in 2021, with the ETFs in each of these categories delivering investors an average return of, for financials, 21.46%, for property, 20.67%, and for technology-focused ETFs, 20.59%. Now, I'd be pretty happy with any of those returns, let's be honest. That's a bit above what I would usually say is the average of between 5% and 7.5%, Sam. Just by a tiny bit. So, what are we looking at with these? So, we're looking at lots of things. This episode, we are going to discuss the top five. And we're also going to discuss why they made the top five, because one of the most

important things that I need you guys to remember is not just picking it because it's popular or because it's performing really well, because the markets do really differently each and every single season. And as you guys know, over the last couple of years, COVID has been a massive feature in the markets. It has impacted it significantly. It has meant that some businesses have absolutely boomed. And it's also meant that some industries have absolutely been ruined. So, it would be a miss of us to look at the last performance of even the last three years and go, all right, well, they've done really well over the last three years. That's what I'm going to invest in. But rather, I want to have a conversation about the top five, about what they mean, about

how they've worked and maybe why they've performed. So, we can start having more conversations about particular asset classes and particular industries and what you might want to invest in and, you know, just start the general conversation. One, because this is the type of stuff I get excited talking about. So, I'm hoping that my excitement and my engagement in this topic is going to wear off on you guys. And that the next time I run into one of you at brunch, you're going to be like, oh my gosh, so did you see that ETF's performance over the last three years compared to a one-year performance? Like wild. And I'll be like, oh my gosh, yes, I know, Sam. So, we'll be using these five more as a learning tool and just little things to pull apart from them. Yes, absolutely.

So, do you want to dive right in? Let's get in. So, we're going five to one, right? All right. We can go five to one. We could go one to five, but I feel like that doesn't leave a whole heap to the imagination. Like it's kind of like, here's number one and here's the four that didn't do as well. Whereas if we do the countdown, like that's more radio-esque, isn't it? Like that's cooler. You're a radio dude. Builds the anticipation. Yeah. You know your stuff. So, Sam, would you like to know what the number five performing ETF in Australia over the last 12 months was? I'd absolutely love to hear. What is it? Would you like to guess or is that just not an option?

I have no financial background and I love you throwing me in the deep end there. No, I'm not going to guess. That's what I'm here for. Okay. Sorry. But had you chosen to guess, I'm absolutely certain that you would have chosen the ETFs, FANG plus ETF. Would I be on the money with that? That's what you were going to say, right? Oh yeah. No, it was, it was really there. You know, it just wasn't a hundred percent confident. Yeah. You were like, is it FANG or FANGs? I don't know. Maybe they were fourth, you know, I just wasn't sure. Yeah, yeah, exactly. But the ETF, FANG plus ETF over the last 12 months, Sam, has returned 39.32% for its investors. Wow.

Look, it is pretty large. And to be honest, from my perspective, it is relatively interesting understanding what it is, because if I'm going to be so brazen, that sounds like a really boring ETF from just looking at it. You go, what is that? But essentially, the FANG ETF offers investors exposure to highly traded next generation technologies and tech enabled companies, which doesn't sound that sexy. But if you think about it, over the last three-ish years, and in particular, over the last 12 months, technology has been more important than it ever has been to keep us connected and keep the world moving. And I mean, everyone's moving to socializing online. So it kind of makes sense that a tech ETF would make the top five. So to make it

a little bit more. What would we call it? Is it relatable or understandable or just contextualize a little bit? Some of its holdings. So it's top five holdings. Number one, Tesla. We know that's gone wild because it's all over Twitter. Every second meme that I see about investment has Tesla in it. So we've seen that on Instagram. And then there's Baidu, which you might not have heard of before, but that's a Chinese multinational technology company that specializes in internet-related services and AI, so artificial intelligence, which kind of makes sense, especially over the last 12 months. Then Alibaba, which is an e-commerce retail internet website, which also does really well. Then there's Navita. I think I'm saying that right. If I'm not,

that's okay. But they essentially design graphics processing units for the gaming and professional market systems, which I don't particularly understand. But Sam, that sounds definitely like something that would have performed well over the last 12 months. And then they also own Apple and Meta Platforms, which was formerly known as Facebook, but they are now the parent company of Facebook, Instagram, and WhatsApp, among other subsidiaries. So, they're all companies that a lot of us would have heard of before, or if we haven't heard of them before, we've probably engaged with. Right. Okay. It's interesting because it is over a bunch of companies, but all in the same niche, really, isn't it? Yes. And something that's really important to point out here, Sam, when you say,

oh, they're all in a similar industry, is that not all ETFs are well diversified across all asset classes and across all different markets. So, this one particularly focuses on technology-based companies. So, if that's what you're interested in and that's what you want to invest in, this could be an option in saying that I probably would be a little bit wary. And I'm not saying be wary because any of those companies aren't doing well. I'm saying be wary because something that's really important to take into consideration when looking at different ETFs and making a decision about what you might want to invest in is actually their inception date. So, this will be listed if you go to the ASX website or literally any information pack that you get about an ETF,

its inception date will be on there and you need to go and look at that. Right. What's important about the inception date? Look, inception dates are important because at the end of the day, we need to know how long it's existed. As much as I'm a financial advisor and I always say things like past performance is not a reliable predictor of future performance and sound like a broken record, it's really important to see that they have had a good track record. Like, how long have you been around? What does that actually mean for me? Because as much as, you know, past performance, not a reliable predictor of future performance, I do want to know that they've been tried and true and tested and maybe had a little

bit of exposure to the markets and that other people have tried this and seen it work. Because I'm a pretty conservative investor. And as much as I'm, you know, I'm looking at these, I'm like, nope, they're all solid companies and I'm not worried about any of them. Who's the fund manager? Who's actually been looking after this ETF? And given they've only been doing it for 12 months, do I trust them? Do I not trust them? Like, what does that look like? So the inception date of the FANG ETF is actually the 27th of February, 2020. And that's not a bad thing at all, but it's definitely worth taking into consideration because if you go to one of our beta shares portfolio, but if you go and look at maybe one of the beta shares ETFs,

they've been around significantly longer. We know who beta shares are. We know what their performance in the market is. We know who their fund managers are. And I think that it's just different horses for different courses. And everything we do in investing comes back to our risk profile. So, we really want to understand like, am I willing to take on this risk? Is this perfect for me or is it a bit risky? Like, what does that mean and how does that work? Right. You say there, we look at our beta shares. For those maybe who aren't aware, what's a beta share? Beta shares is actually just another company and they're going to come up in a hot second. So, I'm sure that'll answer the question, but essentially they are a company

that put together ETFs, much like Vanguard or a BlackRock. They are a big organization and their job is ETFs and different portfolios. All right. Well, that makes sense as to why they're in the top five, but what's number four? All right. Good question. Top four coming in, Sam,

with a total return over the last one year of 42.92% is the BetaShares Global Cybersecurity ETF, which now will make sense as to who BetaShares are. Yeah. I only feel slightly dumb for mentioning I didn't know them right before they came up. Oh my gosh. No, no, it's not. No, it's not. And you wouldn't know this, Sam, but the office that I have in Melbourne is actually in the same space as BetaShares. So, I like to think that we like know each other, we're friends. I really respect BetaShares and

what they get up to. So, it's quite cool to then see them on the list. So, without further ado, I know you cannot wait to hear what the fund objective is, can you? Cannot. I'm just waiting on the edge of my chair. You're like, oh my gosh, I'm so glad Victoria asked me to be on this episode because the first one didn't work. So, essentially, the BetaShares Global Cybersecurity ETF aims to track the performance of an index. So, an index is an average. And also, before I go any further, it's really important for me to point out here that the returns I'm telling you about have already excluded the fees and charges for each ETF. So, we are actually comparing

apples to apples. I don't want you to go, oh, V, but like, what about fees and stuff? Does that come into it? Yes, it does. But their performance has already had the fees taken out so that we're all on a level playing field before I presented this information. So back to our friends, BetaShares, their global cybersecurity ETF essentially gives you exposure to the leading companies in the global cybersecurity sector, which I think is pretty interesting given that cybercrime over the last three or four years has absolutely been on the rise and the demand for cybersecurity services over the last 12, 18, 24 months has been absolutely massive because of the move to work from home and everything that's been going on. And I wouldn't be surprised if we see

pretty strong growth over the foreseeable future in an area like this. So, kind of makes sense that they made the top four, Sam. Yeah, absolutely. So, what do they actually hold? Like, what are sort of the companies that would be in there? So, there are a few companies and I think most of us would have heard of them before. I won't list off the top 10, but they own companies like Cisco, which is, you know, when you go into boardrooms and you see those teleconference phones on the tables, they're made by Cisco. So, that kind of makes sense that they're in there. Then they've got Accenture, which is an international business. They've got companies like Cloudflare, which you might not have heard of, but they're a cybersecurity company that I actually use and

have on our website. All right. So, that's really interesting. But you mentioned with the previous one, inception date. What's the inception date for this one? So, the BetaShares Global Cybersecurity ETF's birthday is actually on the 30th of August, 2016. So, it's been around a little bit longer than our friend's fang. Right. Now, obviously, we always say past performance isn't an indicator. Absolutely not. But what can we take away from this? Well, it's important to have a look at it just so you can see what they've performed over the long term. And something like cybersecurity, right? It's a new-ish area. I mean, I wouldn't say it's new in the last two or three years. It's existed for the last 20 years. But what does that actually mean for us and how has it

been performing as an asset class is really interesting to have a look when you start to get a little bit of tenure out of the fund, right? So, the fund returns after fees over the last one year, as I said, was 42.92% in 2021, which was very, very cool. But over the last three years, it's performed at 30.51%. And then over the last five years, it's performed at 22.4%, which means that since inception or since it existed, that fund on average has returned 22.34% for its investors, which again, is not something to be relied upon. It's not something that you go, oh my gosh, if I invest in these, these are the returns I'm going to get. It's more how steady is this? How consistent is this? And for me, I look at it and I go, okay,

that's interesting. It's actually been growing over the last few years. And I kind of like to see that. But again, when it comes to things that are growing, we have to think, when's it going to top out? Where is the top? Is anything going to happen in the future that could really jeopardize returns like this if you're going to sign up? What's going to happen with the economy? What's going to happen when we all move back to working from work? So, who knows what that looks like, but it is really interesting to look at from my personal perspective. Yeah, absolutely. Okay. So, from there, we move to number three. We do. So, this one comes in at number three, but it definitely wouldn't be something that I

investing, Sam, even though in 2021 it had returns of 59.33% for its investors. We've got the beta shares, good company, but it's the Crude Oil Index ETF Currency Hedged Synthetic Fund, which bet you were like, of course it's that fund. I knew that was coming. Victoria, I've been looking at that all day. I mean, yeah, I woke up first thing I looked at my phone. I was like, got to see where the crude oil's at. And I'm glad you brought it up. But I guess the thing to take away from that is, I mean, you know, I know you a fair bit from listening to your voice when I edit the episode. I'm lucky. I know that might sound creepy, but I get a bit of a gather that you have a fair ethical point of view. And I feel like this would not really slot in with that. No, I don't think

it would, Sam. And I guess that's a pretty interesting call out as well, because we all have different goals. We all have different value sets. We all have different ethics and we all have different ways we want to live our lives. And that's not to say that if you invested in this fund, I'd think any less of you. I actually just want people to be super educated on what they're investing in so that they're making the right decision for them. And if you're there going, wow, I think that oil is the way of the future and I'd really like to invest in it. Maybe this is a fund that you pick up and go, okay, no problems. It's not my job to tell you what to invest in it's not my job to put my ethics and my personal beliefs and opinions on you but I do

think it's pretty interesting because it's kind of hard to avoid given I'm so much like these are my opinions listen to them but I guess this is a point where we've discussed it a little earlier on but these specific area funds you can get it in so many different ways not just oil and not just security and stuff there's all these other ones as well right yeah absolutely and with this particular fund. So, with the BetaShares Crude Oil Index ETF, that one tracks an index, as we said before, tracks an average before fees and expenses, and it provides exposure to crude oil futures, which is actually hedged for currency movements in the Australian and USD exchange rate, which is kind of interesting to talk about. Right. So, when you say hedged, like a hedged fund,

and isn't that just for rich people? Yeah, that sounds bougie, right? No, it's not just for rich people, but if you've watched Gossip Girl, you might think it actually is only for rich people. But hedging is actually just an investment strategy that strategically uses financial instruments or different market strategies to offset the risk of any adverse price movement. So when you look at this fund, they're hedging the currency, which means they are making sure that you as the consumer aren't feeling the difference between the Australian and the US market. So, you wouldn't understand, Sam. I'm assuming that you're not going to understand this, but most of our She's On The Money listeners will. Before I buy anything from the US in USD,

whether that is a pair of shoes or a top, I will literally look at what the exchange rate is online. If I'm like, oh, that's pretty bad, I won't purchase it and I will wait because there are different fluctuations in price, right? Like in pre-COVID, if we can remember back then. Remember when going to America was actually really, really expensive because it was like 60 cents on the dollar. So, every $1 that you exchanged to the US would be significantly more expensive than having your $1 in Australia. That's essentially what they are protecting you against when you're investing in a US-based fund or a US currency fund. So, we're still investing with Australian dollars into an Australian fund, but they're hedging the risk to make sure that you

don't have as riskier of an investment as you would if you'd invested in USD. And then what if the USD absolutely falls? You'd be in a bit more trouble. Right. Okay. That makes a lot of sense. Does that actually make sense? You're staring at me like, Victoria, why have I signed up to do this episode? I'm getting a lot of facts and I'm processing, but that does actually make a lot of sense though so the points are bringing on the others then let's look at inception what's the inception on this one and what's the performance like so it's birthday is the 11th of november 2011 which actually means its birthday is the 11th of the 11th 2011 that's a pretty good date but you asked me before about performance right and we want to know what performance is because

that's why they've made it into the top five like they're the third best performing etf of 2021 so you'd be like all right well with a return of 59.33 you'd be doing pretty well over the long term right that's what i would take away absolutely not so if you look at their three year performance sam they've done negative 14.32 over five years they've done negative 12.8 which means since inception so since the fund began they've had an average return of negative 16.73, which means if you'd started investing in 2011 when they started, you're quite possibly, even with this year's performance of 59.33%, you could still be significantly behind in this investment, even though they've done really well over one year. So, you might see that and go,

oh my gosh, I should invest. That's why performance is definitely not a reliable predictor of what they will do, but also is not a reason to pick a fund because how do you know they won't go negative again? Like that could potentially be quite risky. Why would people have joined them in the past couple of years if they've just had that negative history before they've had this recent positive? Look, they might actually believe in the industry or in oil. And I mean, at the end of the day, I don't know how into understanding the markets and understanding oil is to you, but you drive a car, right, Sam? Over the last two years, has petrol increased in price? Very true. Way too much. Yeah.

So, petrol prices have increased significantly, which is where we as a consumer might feel it the most. But crude oil has actually gained more than 60% this year. So, it has increased in value significantly. And after I did a little bit of research, the research is telling me that prices have risen as more vaccinated populations are brought out of COVID lockdowns and it's supporting a revival in economic activity. At the same time, we're seeing lots of people not actually able to work and lots of people actually at a standstill. And that makes oil a pretty attractive commodity for generating power and keeping the economy relatively steady. And thus, the higher demand is pushing crude markets even higher. So, it makes sense as to why the oil industry is doing really

well, but historically it wasn't. And that's why I'm saying over the last 12 months, markets have been absolutely wild. Like we're only just working out what COVID normal could actually look like, but it's interesting to see that a company that never would have even come close to the top five, let alone the top 50 is now literally sitting at number three because of the way the markets are reacting to COVID. And a lot of people and a lot of countries are wanting to hoard oil because that's obviously energy and it actually helps the economy go round. Like, it's an asset that during a time of turmoil, countries want to hold on to. So, that kind of makes sense. Super interesting. And look, makes a lot of sense. Even if you're not intending to ever

invest with them, there's definitely some lessons to take away from that. So, we've got the top two that we're going to look at right after the break. All right, Sam, we are back. And I know that you are super excited to hear about the top two. I'm looking at you and you were like, wow, what is going on? But genuinely, I am really, really enjoying this conversation. One, because this is my bread and butter. This is what I do every day. But two, I think what we're seeing from the last three that we have spoken about is a lot of this is actually driven by what's going on in the world. So like if we look at the performance of ETFs and I've just given you the list, you would have been like, yeah, cool, Victoria, like they performed

well, but understanding why oil might've performed really well and why the cybersecurity ETF has performed well and why the Fang Technology ETF was doing well, I think you go, oh, kind of makes sense that they would have made it into the top five. And I mean, it's not toilet paper, but we knew that was popular. And it's kind of like that, like people are starting to invest in things that are running the economy during a time of turmoil. So it kind of makes sense. But at the same time, I don't know, I hope everyone's enjoying learning a little bit more about why they might have made to the top five and what that actually means and what they're made up of. Well, I think like looking at this and the bits that we're pulling apart from this gives us a

bit of insight so that we can look at the world now and then be like, well, what could it mean going forward to the, what else could we be investing in? Yeah. And it kind of gives you a good insight as to what you might accept and what you might not accept. So saying, all right, well, the crude oil index performed at 59.33%. I go, great, but I don't want to invest in that. Like that's not where I want my returns. But then on top of that, if you take the ethical conversation out of it, for me, that industry fluctuates far too much for me to feel secure investing in that asset. You've kind of got to look at it and go, would I be interested in that even if it was a thousand

percent ethical and definitely up my alley? Probably not because it just carries too much risk and too much volatility. And I just don't want to be that person. That's not for me. But what is for me is understanding it all so that I make the decision that actually aligns to my values and actually aligns to what I want to do. So, Sam, let's not hold back anymore. I'm going to introduce number two. Okie dokie. What do we got? Oh my gosh. Number two comes in at a return in 2021 of 69.44%. And when I was recording with

Jess, she was like, oh my gosh, ha ha ha, 69. So, if you could just do that too, that would be really, really great. I was trying to be professional and not acknowledge it but that's brilliant we're not professional on this podcast she had a good laugh we're all friends here but that etf is actually again from beta shares and that is the geared us equity fund currency hedged hedged fund which sounds real bougie but when you start breaking it down you'll be like oh that kind of makes sense okay so well let's break it down oh no that's your job what is it let me just go get an mba i'll just need what five years how long did you want okay but before you tell me what they invest in this is gonna be another maybe dumb question for

me but what does geared mean no such thing oh my gosh so geared is actually super common when it comes to the investment world but it's not something that i think the average investor would engage in, especially off the bat, because a geared fund is essentially taking an investor's original investment and their money and borrowing additional money with the aim of increasing its size. So essentially a geared investment fund, also known as a leveraged fund, is often a way to increase your exposure in the share market. So what this fund is doing is actually getting your money, putting it into the ETF, borrowing some money to maybe match or even make up some of the money you did so that you get more exposure to more shares. Because say, Sam, you invest 10

bucks and you can buy 10 units in this ETF. What they're saying is you won't just get 10 units, you might get 14 or 15 units and therefore more exposure and more return. So for what you're investing, you might actually get the return of 14 units or 15 units instead of the 10 units that you could afford because there's a level of debt involved. Important to note though, as much as that sounds super sexy or it sounds sexy to me as a financial advisor, it significantly increases your risk because it's not just investing anymore. It's investing and you're taking on debt or that ETF is taking on some debt, which means you might lose some money. Obviously in the share market, we've got to be really vigilant and understand that, but you're also increasing your risk to

losing some money and still having some debt. So it might be for some people, it might not be for other people. You can actually leverage a lot of things. So you don't just have to pick a leveraged ETF. You as an individual investor can actually go get your own, what's called margin loan and borrow money so that you can then invest that money into the share market. So that's actually a really common way of investing. And no, it's not just for wealthy people, but it does significantly increase your risk, which is why maybe as first time investors, we haven't heard of something like that. Because to be honest, I don't think I've ever in my entire career recommended a leveraged fund to somebody who's only just starting out. I just feel like it's not the

right gateway. Yeah, right. Okay. I guess it's the sort of thing, I mean, that's why wealthy people do it, right? Like if they have the money, they're more likely to be able to take the risk. Yes, absolutely. And at the end of the day, that's what they can do because they can afford to lose a bit more and they might not invest their entire portfolio in a geared portfolio, right? They might have their hundred grand invested and 10% of that might be geared. So they get better returns, but it's not a hundred percent of their makeup. So it's important to have that conversation and understand it. And I mean, you might be listening to this and you go, oh my God, a geared fund. I'm a risky guy. I'm going to go and get one of those. That's fine. But what I

want you to understand is what that means and how that works and how that increases your risk and what that actually means in relation to our risk tolerance. And we did, Sam, you'd know, because you edited it, you lucky person. We did an entire episode on risk profiles and what that actually means. And before you even go and pick an ETF or before you go and pick any kind of investment, you need to go back and go, well, what is my tolerance to risk? Am I a conservative person? Am I more of an aggressive type of investor? What am I willing to take on? Because there are some investment assets that you would go, well, Victoria, you told me you were conservative because I am, but you told me you were conservative and you're putting on the table investments that

don't actually align to that profile. So you're not going to be comfortable. You're not going to be able to sleep well at night. This isn't actually aligned to your goals and the things you said you wanted to achieve. So before you even consider looking at any type of investment, you need to understand who you are, what your goals are. For example, are you planning on investing for five years or the next 50? Like, what is the plan? Because your risk tolerance will absolutely change. If your plan is to invest for five years, you're going to be significantly more conservative because you have less time to play with. Does that make sense? Yeah, absolutely. Okay. So, we're looking at this. It is a little bit more risky.

One of the other things we've clearly gathered that can add to risk is taking a look back at the past obviously again performance not an indicator but let's look at the inception date how long ago was this one so this one's been around a fair while as well this one was born on the 17th of august 2015 and as we said has had epic performance over the last one year so 69.44 percent in 2021 which you are 12 you are a 12 year old boy but over the last five years has performed at 31.16. Over the last three years has performed at 49.20. And since inception has performed at 25.75%, which I think is a pretty good return. And as we said before, this fund is geared, which means it does borrow additional money to invest on your behalf as the investor.

It's also hedged, which means it is hedged for currency risk, which is interesting and nice to know. But then with that money, it is investing in the S&P 500 index fund, which is quite interesting and you might not have heard of it before, but it is the US fund that essentially invests in each of the 500 companies in the S&P 500, which is essentially just the top 500 companies in the US, which is essentially just investing in the top 500 companies in America on average. So if we compare it, because as we said before, they're borrowing money, how much value does this bring? What does that actually mean? So if we look at over the last three years, I said that this fund had performed 49.20%. If you compare it to just the S&P 500

index, if you went and purchased that, not inside the geared US fund with beta shares, over the same period of time, that would have performed at 25.41% in comparison to the 49.20%. So, you can see that there's actually a pretty significant difference, but again, you're taking on a lot more risk. Okay. So, I mean, just before you mentioned the S&P 500, I know you said the top businesses, but would that have businesses in there that I'd know? Yes, absolutely. So, the S&P 500 is actually made up of 500 of the largest US companies, which means it includes some of the most recognisable and I would say popular stocks in the world. So Sam, they've got companies

like Alphabet, which is Google. They've got Amazon. They've got Apple. They've got eBay. They've got Meta, which is Facebook's new name. They're trying to reshape themselves for 2022, I believe. They've got McDonald's. They've got Microsoft, Netflix, Nike, Tesla, Twitter, like I could go on, they've got Disney, like all of the companies that you've probably heard of having shares are very likely to be in the S&P 500. So, it's not companies that you've never heard of. Like they're literally the 500 biggest companies in the US. I knew every name you just mentioned. Oh, look at you, you investing wizard. But the important thing to understand there is

it is an index and as we said before it's not just oh well I invested in Nike therefore I get Nike's returns you're getting the average of those 500 companies which from my perspective is pretty incredible and they're all picked out by a fund manager it is managed ongoing but it's very interesting to see how these things get put into different portfolios like the ETF that purchases that and then gives it and hedges it like that's kind of cool to see it And obviously, in 2021, that performed pretty well. Awesome. Okay, so that's the S&P 500 and what that means there for us.

But you've genuinely built my anticipation for this. I am excited for number one. It's like a top 20 countdown of hits, and I'm excited to hear what's going to be at number one. What have we got? It really wasn't a triple J top 100. Like, the anticipation for that countdown is definitely more than Victoria's countdown of the five ETFs from 2021. but coming in at a one-year return of 86.72% was, get this really sexy name, the ETFS ultra-long NASDAQ 100 hedge fund, which we'll start breaking down and explain because

that doesn't sound nearly as sexy as it definitely could have. It would have been more sexy if beta shares was in there. Beta shares sound sexy. Did you say ultra-long? Was that in the name? yes it is yep yep no i didn't make that up it is called the etfs ultra long nasdaq 100 hedge fund i mean it's a long name and they even put it in the name yeah they're like by the way we're a long fund but that's a thing right so this is actually an etf that aims to provide its investors with returns and before we learned what geared returns were so they're borrowing money to invest that are positively related to the returns of the NASDAQ 100 index, which is another index fund, which is a fund managed by NASDAQ, which Sam, you'll be very excited to know, also has an office in my

building. It's as though we live in a building that is just full of financial services. Go figure. I'm also a financial services company, but that's like kind of cool to be like, oh, where's your office, Victoria? I'm like, oh, it's where beta shares and NASDAQ are. Do you know that? Like, lol jokes do you all hang out at the same cafe go get your coffees together i mean we do hang out at the same cafe because it's literally in the building but like they probably don't know who i am for good reason like they're nasdaq i'm victoria but the nasdaq 100 is one of the world's preeminent large cap growth indexes which sounds like a very complicated term but when you say large cap it essentially just means companies that are worth more than 10 billion dollars so they're small

caps, mid caps and large caps. A large cap would mean that that company is worth more than $10 billion. A mid cap means that the market value sits between $10 and $3 billion. And then small caps are under that. So it's kind of interesting to understand that because, you know, in the investment world, people throw that around. Like you'll be at a cafe and you'll hear some finance bro being like, oh yeah, I invested in a small caps this weekend. You'll be like, what the hell is that? He's literally just talking about companies who have a certain income and there's nothing sexy about that. In fact, I am convinced that the finance industry makes up these terms to sound smarter, when in reality, they could have just said rich companies, and it would have

meant the same thing to me. Like, oh, companies worth more than $10 billion. Oh, there you go, Victoria. That makes a lot more sense. But essentially, the NASDAQ 100 includes 100 of the largest domestic and international non-financial companies that is listed on the NASDAQ stock market based on how much money they bring in. So that's kind of interesting. But then also what's interesting is that across these ETFs that we've discussed have been lots and lots of different stock markets. And here in Australia, we only have exposure. I mean, we can invest in any, but as Australians, we only have the ASX. So we have one stock market, whereas in the US, they actually have 13 different stock exchanges. So for a lot of Australians, I think the assumption

is that, oh, well, if you live in Australia, we have the Australian stock exchange. And if you live in America, you must have the American stock exchange. When in reality, that's not it. There are lots of different stock exchanges. In fact, the US has literally 13 different ones. And what's been interesting is that over this conversation, lots of different stock exchanges have come to play in the top five and what these portfolios have been made up of and what these ETFs hold. But from my perspective, what's been really interesting is that they're all impacted by the same market conditions at the moment. So if you look at the world, like COVID is global, whereas historically that might not be true. So you might find something is only going on

in America and therefore only US stock exchanges are impacted by that. Or, you know, way back when the drought was happening in Australia and it wasn't in America and it wasn't impacting them but it did impact our services and what was going on whereas right now what we're going through with COVID is actually global and I just find it really interesting to have this conversation about what drives markets and which markets are impacted and what does that mean as an investor and should I buy should I sell should I get out like what does that mean and the summary of that is no you don't want to get out, you want to ride it out. Would that be so like using America and the US as an example, you'd look at, okay, in a couple of years, we're going to have another US election.

That's probably going to, for whatever way, influence markets as well. Yes, absolutely. And we've actually seen that over the last few years about how volatile the markets can be based on what presidents and what government are doing. Because remember back when Trump was president and he would tweet one thing and the markets would go crazy. I think there's a lot to be said about how media, social media, and the internet now play into the way that markets are valued. Because we also saw semi-recently what happened last year with GameStop. So at the start of last year, a whole heap of people on an internet forum decided to short GameStop and were super successful at changing market prices, making a lot of money, and essentially screwing the share

market. So I don't know where this is going to go or what that actually means. If you don't know what I'm talking about when it comes to GameStop, I did a whole IGTV on it. Go and check it out on our Instagram. But GameStop was a really interesting, I guess, learning for the world to see that now it's not just markets. It's not just performance. It's not just CEOs. It's not just what your company is selling that can drive its share price. And I think that that's quite quite worrying at the same time as being quite fascinating absolutely so taking a look at our number one again yes the etfs ultra long nasdaq 100 hedge fund i mean the the one thing i've been taking away from this is the inception dates because i can get a bit of an understanding

there as well what's the inception date for this one it was the 10th of july 2020 which means we don't have three year and we don't have five year performance to compare it to but what i can tell you is that, do you know, there is $20.17 million in that fund as of January this year, when I had a look at it. That's a lot of money. That is a lot. That is a lot of money. And it's interesting to see how that has grown since the 10th of July, 2020. Like someone has created an ETF, started putting it together. And over the last 12, now what, 18 months, because it was started in July, they've managed to raise $20 million and they now have $20 million worth of responsibility. like that's really interesting so super interesting and taken away a lot from this

one of the things i'm taking away from it is that a lot of them are even though they're like in the top five ones i wouldn't probably go for or would probably be too scared off by the risk and like there's just because they're there isn't necessarily what they're ones you'd go for no and that's why i really wanted to do this episode and have this conversation because i get asked all the time and i can never give you guys an answer on this because it's frankly, unethical for me to tell you which ETF to pick or which share to pick or whatever you're asking me. But a lot of people will slide into my DMs and be like, oh, I looked at the top performing ones last year and I'm going to pick this. And I go, that's not how you pick a share.

But who taught you how to pick a share? Nobody. So I'm going to do that. I'm going to teach you guys exactly how to pick a share, how to pick an ETF, what that means, how to evaluate your own personal beliefs and values and goals to make sure that you're picking something that you're comfortable with. I'm not going to tell you what it is, but I will give you the tools and the resources in the conversation so that you can look at something and be like, ah, yes, Victoria, the ETF is ultra long. NASDAQ 100 hedge fund is absolutely not aligned to my values because it's geared and it's a hedge fund. And, you know, I just don't want to carry that amount of risk, even though they've got great return. I'm probably looking for something that's more

aligned to my personal preferences. And I don't know, there's something really sexy about people being able to say, no, that doesn't suit me for these reasons. Whereas a lot of people will just go, oh, what do my friends have? Or how have they invested? Or what did they pick? And it's not to say that that wouldn't work for you, but I think there's something really empowering about going, no, now I know why the top five performed the way they did. Does that mean that they're the top five ETFs that a financial advisor would pick for their clients? Absolutely not. But it's really interesting to see what drives them and what creates the performance. And Sam, even one of those ETFs that made the top five had literally over the last five years had nothing but negative

performance. And somehow because of the market conditions has absolutely bounced back. But that's where to invest properly, we actually have to understand the market and understand what's going on. And if you're not super empowered by that and you're like, wow, Victoria, I don't really want to pick my own stuff, which you absolutely can. You can go and do all of this yourselves. But if not, there are solutions for you. For example, I organized my partnership with Six Park. So, if you don't want to pick any of these and you just go, Victoria, I've got this amount of money and I want to invest ethically or I want to invest sustainably, can you tell us what to do? Six Park can provide you with financial advice so that you can go and do that. And that's why I'm partnering

with them because there's so much more to the investment world than just going, hey, what do my friend's own. Maybe I'll just go buy that ETF for the rest of my days. Like it's just not going to work in saying that it doesn't mean you can't go do that. Like we have so many different investment platforms that we could go and pick and choose. And I don't know, I just think it's really empowering to be equipped with the choice and equipped with the education so that you can go, hmm, what am I looking for? And Sam, you might turn around and go, Victoria, I only want to invest in an ETF that picks companies that have women on their boards. Sam, that ETF exists. Like that's super empowering to know that your money is going to be invested in line with your values

whether you're investing a dollar or a million like it's very cool to think that we now have access to the same opportunities that someone with a million dollars does if we're starting with five bucks like that's cool is there okay purely off my own personal interests could i find one that's purely based off companies around audio don't know if you would yes absolutely because i just googled this and you could go and pick the round hill streaming service and technology etf like there is an etf for everything and this etf i mean it doesn't look like it performs well so i'm not sure if i would pick it but it's literally just holding a whole bunch of audio engineering companies like that's kind of cool absolutely that's that's really interesting

and i just wanted to pick up on one thing you said earlier as well like you were saying you You know, we might look at these lists or we might look at, you know, our friends make recommendations. I love the idea of taking what we've taken from this episode and applying it also to the suggestions our friends make, you know, and being like, cool, you've made a suggestion. Now I'll look into it closer as to whether or not I'll make a decision. Yes, that's actually a really, really good point because too often you go, oh, what do you hold?

And your friend might be like, oh, I hold the Vanguard ethical ETF. And you go, okay, no problems. but you don't take the time to look at what you should be looking at because to be honest when you do google the fact sheet and try and understand what's going on and you go on the website and it says what are the key facts what's the performance what's the distribution you do get really overwhelmed and having a look at okay i'm gonna go find the inception date you know how long it's existed for you can have a look at its past performance you can go and have a look at what it's made up of? What sectors are they allocating the assets towards? Are you looking at one

particular industry? So, for example, we looked at a crude oil ETF just before. Obviously, that's in one area. Or are we looking at a really well diversified portfolio of assets? Are they holding healthcare? Do they have financials? Do they have industrials? Do they have real estate or information technology? What do you want from an ETF is really, really important to understand before you invest? Because I think too often people get caught up in the, I just want to invest Victoria. And I go, okay, but like you're smart, like you're smart and you're empowered. Do you want exposure to global markets? Like, do you want Sam international shares? And you might go, no, Victoria, I only want to invest in Australia. And I go, okay, no problems. But

you might say, well, actually Victoria, I really want to invest internationally because if Australian markets aren't performing well, then I've got a backup of US markets or an international market. Because if something's going down in Australia, I want to balance it out. You go, okay, that makes sense. Let's look for something that might have that for you. So, I think from my perspective as a financial advisor, that's what's really important to take into consideration. Obviously, then we do need to take into consideration fees. And we didn't really discuss that because I took them out before presenting portfolio performance. But on average, I would fully expect the fees of an ETF if you're going directly to be less than 1%. And if not, I'd be a bit like, hmm, what are you

putting on the table that makes it worth that? But yeah, it's an interesting conversation. And to be honest, I cannot wait, Sam, for you to have to edit hours and hours more content of me ranting about different investment assets. And in the next couple of weeks, I'm going to drop an episode that is the top five shares, like direct shares and why they performed really well and what that actually means and how it works. Because I think that a lot of people would be surprised at why and how, and I am, but Sam, I hate to do this to you. I think that's all we have time for today. My only episode wrapped up already. You're already being booted off. I mean, if Georgia decides to quit, you can definitely

pop your resume in if jess isn't around again we'll have you back but it has been an absolute pleasure and uh cheers saving my butt and still getting this episode in people's ears on a wednesday morning we love you for that listen to us talking and edit this all together again you are so welcome all right guys that is all we have time for today but just before we head off we'd like to acknowledge and pay respect to australia's aboriginal and torres strait islander peoples they're the traditional custodians of the lands the waterways and the skies all across australia we thank you for sharing and for caring for the land on which we are able to learn we pay our respects to elders past and present and we share our friendship and our kindness sam do you

want to give it a crack at our reading our disclaimer or do you want me to have a hot go oh no i'll have a hot go all right your turn do it better than jess oh the advice shared on she's on the money is general in nature and does not consider your individual circumstances she's on the money exists purely for educational purposes and should not be relied upon to make an investment or a financial decision and we promise that victoria divine is an authorized representative of australia pacific funds management proprietary limited abn 3413 2463 257 afsl 3391951 oh check you out you probably knew that off the top of your head from having to edit it literally three times a week every week let's say that we can say that but we'll see you next week guys bye