Switching ETFs: IVV to VGS or A200 to DHHF?

Switching investment funds based on changes in your financial situation or to optimize for lower fees can be a sensible strategy, provided you’ve considered all the implications, including transaction costs and potential tax consequences.

Switching from IVV (iShares S&P 500 ETF) to VGS (Vanguard MSCI Index International Shares ETF) could be a strategic move if you’re looking for a more affordable unit price and broader international exposure beyond the U.S. market. VGS offers a diversified portfolio that includes a mix of large-, mid-, and small-cap companies across developed markets worldwide, which might provide a more comprehensive international exposure compared to IVV’s focus on U.S. large caps.

On the other hand, moving from A200 (BetaShares Australia 200 ETF) to DHHF (BetaShares Diversified High Growth ETF) could also align with your goal of managing investment costs while maintaining a focus on high-growth assets. DHHF is a diversified fund that typically invests across various asset classes, including Australian shares, global shares, emerging markets, and bonds, but with a strategic focus on growth-oriented assets. This could potentially offer a broader exposure compared to the more focused Australian large-cap stocks in A200.

However, it’s important to consider the tax implications of selling your current holdings, especially if they have appreciated in value since you purchased them. Capital gains tax could apply, and this might reduce the net benefit of switching funds. Since you plan to hold your investments for at least 20 years, the long-term growth potential and the compound effect of lower fees could outweigh the initial tax costs, but this would depend on the specific figures involved.

Additionally, frequent switching between funds to chase lower fees or slightly better performance can lead to overcomplication of your portfolio, potentially increasing costs and making it harder to manage. It’s crucial to balance the desire for cost efficiency with the ben

Show more.....

Hi Emily.

It’s a reasonable thing to do since it meets your practical situation.

I guess the downside is your situation changes later and you want to go back to your previous setup, leaving you with additional funds in your portfolio. So it can create some extra ongoing admin/complexity, something to keep in mind.

If you’re ok with that then switching to either a lower price per unit fund, or an all-in-one ETF seems like a perfectly sensible thing to do in this type of scenario.

All the best.