Hi P.T.
I was reading through this particular thread and noticed your comment re: DUI vs purchasing VGS. I actually like DUI and its sister in AUI. I had a look through DUI's half yearly and noticed that they've offloaded some of their international exposure in terms of Vanguards Tech ETF and also VTS.
VGS is in my top 5 holdings and I will only use an ETF for exposure to international equites. It has an expense ratio similar to that of DUI and pays a distribution of about 2-point-something percent on a quarterly basis. VGS has high concentration risk in terms of the fact that it's largest top 10 holdings (Microsoft, Apple, Nvidia, Alphabet 1&2, Amazon, Meta, Eli Lilly, Broadcom & Tesla) constitute 22% of this ETF. At first, it was a little concerning. Especially as Tech makes up 25% of it's holdings.
But then when I looked at DUI, I could see that the concentration risk is much, much higher with their top 4 holdings in CSL, BHP, CBA & TCL making up over 33% of their holdings. VGS is trading at a PE of 21x compared to DUI trading at 25x. From a real life perspective, I utilise the global services of companies such as Microsoft, Google, Meta and Amazon on a daily basis whether that's directly related to work or my personal life.
Whereas, I don't bank with CBA and I've never used a toll road in my life and with a bit of luck, I'll never have the need for CSL's life saving products - but I do hold CSL directly.
I think that my point is in relation to your comment about buying DUI at a discount over VGS (and of course...the fully franked dividends that come with it). Since your post in December 2022, VGS has returned close to 30% on capital over DUI in a little over 2 years. Since the inception of VGS back in November 2014, VGS has out performed DUI by approx. 100%. That's not bad for a product that costs the same in fees as DUI. My point is...does focusing on a discount to NTA result in opportunity cost elsewhere?
As I mentioned, I like DUI and maybe their highly competent portfolio managers can see a correction coming in international equities, hence their trimmings in U.S. ETF's. If there was a massive pullback in ETF's such as VGS, I'd be buying it hand over fist. I'm actually hoping for the opportunity that would allow me to buy VGS again in the $60 range. That would be a dream. If the worlds largest, most profitable global companies are on the chopping block, then global economies will be slaughtered and I'd imagine that any discount to NTA may only widen and quite possibly, the gap may never close.
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