With such volatility, investors may be reviewing their strategies to understand what can help provide relief in the current environment. 

A new report from VanEck has shed light on the interesting pendulum of growth and value investing. 

Over the long term, the relative returns of value and growth companies are negatively correlated. In other words, in the past, when value has outperformed, it probably has coincided with a period in which growth underperformed and vice versa.

According to MSCI, individual factors have been shown to outperform during different macroeconomic environments. Value is "pro-cyclical", meaning that this type of strategy historically outperforms during rising market conditions.

What's the difference between growth and value investing?

There are many different strategies investors use to grow their wealth. 

Two common strategies investors use are growth and value investing. 

Growth investors focus on companies expected to deliver above-average earnings or revenue expansion, often prioritising future potential over current valuation metrics. 

It is commonly associated with sectors where companies can scale quickly, innovate, and expand revenues at above-average rates. 

The Technology sector is the classic example, like companies focussed on software, semiconductors, or artificial intelligence. 

These businesses can grow rapidly with relatively low marginal costs. 

The healthcare sector – especially biotech and pharmaceuticals – is also prominent, as breakthroughs can lead to explosive earnings growth.

In contrast, value investors seek stocks that appear undervalued relative to their intrinsic worth, often identified through low valuation multiples or temporarily depressed prices, with the belief that the market will eventually correct its mispricing. 

While growth investing emphasises momentum, innovation, and scalability, value investing relies on patience, margin of safety, and mean reversion. 

How to target these strategies with ASX ETFs

There are several ASX ETFs to consider for those targeting growth or value shares. 

For growth, ETFs to consider include: 

• Vanguard Diversified High Growth Index ETF (ASX: VDHG)
• ETFs Fang+ ETF (ASX: FANG)
• Munro Asset Management – Munro Global Growth Fund (ASX: MAET). 

For value investing: 

• Vanguard Global Value Equity Active ETF (Managed Fund) (ASX: VVLU)
• VanEck Msci International Value ETF (ASX: VLUE). 

In terms of performance, these growth funds are down between 5% and 15% year to date. 

While the value funds have perhaps weathered the storm slightly better, falling between 2% and 5%. 

It's important to remember this small snapshot is not representative of long term opportunity. 

However, according to VanEck, current conditions may favour a value focus. 

In the past twelve months, however, changes in macroeconomic indicators potentially bode well for a value rotation, and inflation, being driven by supply shocks from the crisis in the Gulf, could propel value's recent relative outperformance further.

Inflationary expectations have risen sharply since the US-Iran conflict commenced. A higher inflation environment supports value company valuations, and we think the current upward pressure on long-dated bond yields is likely to remain if the market remains uncertain about growth and inflation. Value typically outperforms in such an environment.

The post Should investors be targeting growth or value ASX ETFs right now? appeared first on The Motley Fool Australia.

With that mindset, these are three Vanguard exchange-traded funds (ETFs) that I think make a lot of sense for most investors. Not as the only holdings in a portfolio, but as strong building blocks you can layer other ideas around.

Vanguard MSCI Index International Shares ETF (ASX: VGS)

If I had to pick one ETF to represent global growth outside Australia, this would be it.

The VGS ETF gives exposure to around 1,300 companies across developed markets, with heavy weightings to the US but meaningful representation across Europe and parts of Asia as well. What I like is how naturally it tilts toward the parts of the global economy that Australia simply doesn't offer in size, particularly technology, healthcare, and global consumer brands.

This ETF doesn't try to be clever. It just captures the long-term growth of some of the world's most dominant businesses and lets compounding do the work. For investors who spend most of their time looking at ASX shares, the Vanguard MSCI Index International Shares ETF is an easy way to avoid being overly concentrated in one country or one economic cycle.

Vanguard Australian Shares Index ETF (ASX: VAS)

The Vanguard Australian Shares Index ETF is about home-ground exposure.

The Australian market has its quirks. It's heavy in banks, resources, and dividend-paying businesses, but that can actually be a feature rather than a flaw. The VAS ETF provides broad exposure to the ASX's largest shares, many of which generate strong cash flows and pay reliable dividends.

What makes the Vanguard Australian Shares Index ETF especially useful is how it complements international ETFs. Where global funds lean toward growth and innovation, this ETF brings income, franking credits, and exposure to sectors tied to population growth and infrastructure.

For investors who want simplicity, I think this fund could be the backbone of an Australian equity allocation without needing to pick individual shares.

Vanguard Global Value Equity Active ETF (ASX: VVLU)

This one adds a different flavour to a portfolio.

The Vanguard Global Value Equity Active ETF is actively managed, but in a very systematic way.  It focuses on global stocks that look cheap relative to fundamentals like earnings, book value, and cash flow. That makes it a natural counterbalance to growth-heavy portfolios, especially after periods when expensive stocks have run hard.

I like the VVLU ETF because it gives exposure to global value without relying on discretionary stock picking. The rules-based approach keeps it disciplined, and the global remit means it's not tied to the fortunes of any single region or sector.

In a world where market leadership can rotate quickly, having a value tilt alongside broad market exposure can help smooth returns over time.

Foolish Takeaway

I don't think there's such a thing as a perfect portfolio, but there are sensible foundations.

A combination of the VGS ETF for global growth, the VAS ETF for Australian exposure and income, and the VVLU ETF for valuation discipline covers a lot of ground with just three ETFs. From there, investors can add satellite positions, individual shares, or thematic funds depending on their goals.

The post 3 Vanguard ETFs I think deserve a spot in most portfolios appeared first on The Motley Fool Australia.

These are three Vanguard exchange-traded funds (ETFs) I think smart investors could look at buying in February.

Vanguard Global Value Equity Active ETF (ASX: VVLU)

The Vanguard Global Value Equity Active ETF stands out for me because it offers something different from the growth-heavy portfolios many investors already own.

Rather than chasing the most popular stocks, this ETF uses an active, rules-based approach to focus on companies trading at lower valuations relative to fundamentals like earnings, cash flow, and book value. That makes it a useful counterbalance when expensive growth stocks dominate market leadership.

I like the Vanguard Global Value Equity Active ETF as a way to introduce valuation discipline into a portfolio without having to pick individual global value stocks. It's not about timing a rotation perfectly, it's about diversification and improving risk-adjusted returns over time.

Vanguard FTSE Asia Ex-Japan Shares Index ETF (ASX: VAE)

The Vanguard FTSE Asia Ex-Japan Shares Index ETF is a higher-risk option, but one that can make sense for investors with a long time horizon.

The ETF provides exposure to fast-growing Asian economies, including China, India, Taiwan, and South Korea. These markets come with more volatility, but they also offer growth drivers that are hard to find in developed markets, particularly in technology manufacturing, financial services, and consumer demand.

I wouldn't build a portfolio around the VAE ETF alone, but as a satellite holding alongside broader global exposure, it can add a different growth engine that isn't tied to the US or Australian cycles.

Vanguard MSCI Index International Shares ETF (ASX: VGS)

The Vanguard MSCI Index International Shares ETF is still one of the best core ETFs available on the ASX, in my opinion.

It gives exposure to around 1,300 stocks across developed markets outside Australia, including the US, Europe, and Japan. Importantly, it provides access to sectors like technology and healthcare that are underrepresented on the ASX.

What I like most about the VGS ETF is its simplicity. It's low cost, broadly diversified, and designed to compound over long periods. If I had to pick just one global equity ETF to hold for years, this would be very hard to go past.

Foolish takeaway

Smart investing doesn't need to be complicated. A mix of global value, Asian growth, and broad international exposure can go a long way toward building a resilient portfolio.

The VVLU ETF adds valuation discipline, the VAE ETF introduces long-term regional growth, and the VGS ETF provides a dependable global core. Together, they form a balanced trio that I think makes a lot of sense heading into February and beyond.

The post 3 Vanguard ETFs for smart investors to buy in February appeared first on The Motley Fool Australia.

I'd be looking for broad diversification, low fees, and exposures that I could happily hold through market ups and downs without constantly second-guessing myself.

That is where Vanguard exchange-traded funds (ETFs) really shine. They let you build a serious long-term portfolio without needing a huge starting balance or perfect timing.

These are three Vanguard ETFs I would personally buy with $3,000 today, and why.

Vanguard FTSE Asia Ex-Japan Shares Index ETF (ASX: VAE)

Asia is one of the most important growth engines in the global economy, yet it is often underrepresented in Australian portfolios. If I only owned Australian and US shares, this would be one of the first gaps I would want to address.

The Vanguard FTSE Asia Ex-Japan Shares Index ETF provides exposure to major Asian economies, including China, India, Taiwan, and South Korea. These are markets tied to long-term trends like rising incomes, technology adoption, and global manufacturing.

It is unlikely to be the smoothest ride, and I fully expect periods of volatility. But if I am investing with a long-term mindset, I am comfortable with that trade-off. For me, the VAE ETF is about positioning for where global growth is likely to come from over the next decade, not the next quarter.

Vanguard Australian Shares Index ETF (ASX: VAS)

If I could own only one ETF on the ASX, the Vanguard Australian Shares Index ETF would be near the top of my list.

It gives instant exposure to the Australian share market, spreads risk across hundreds of stocks, and delivers a reliable stream of income thanks to Australia's dividend culture. I like that it includes the banks, healthcare leaders, and resource companies that dominate our market, without having to pick winners within each sector.

For a smaller portfolio, I see the VAS ETF as a strong holding. It is not exciting, but it does not need to be. Its job is to provide steady exposure to the local market and let compounding work its magic over time.

Vanguard Global Value Equity Active ETF (ASX: VVLU)

The Vanguard Global Value Equity Active ETF is the ETF I would use to bring some balance to the portfolio.

A lot of global indices are heavily skewed towards expensive growth stocks. The VVLU ETF takes a different approach by actively tilting towards companies that look cheap relative to their fundamentals, using Vanguard's quantitative model.

What I like about this ETF is that it still offers broad global diversification, but with a clear value bias. It includes companies across a wide range of sectors and markets, which helps smooth out some of the concentration risk seen in traditional global ETFs.

I see the Vanguard Global Value Equity Active ETF as a patient investor's ETF. It may not always lead the market in the short term, but over a full cycle, I think it can play an important role in a diversified portfolio.

Why I like this mix

If I put these three ETFs together, I get exposure to Australia, Asia, and developed global markets, with a blend of growth and value styles. That is a level of diversification I would feel comfortable holding through both good markets and bad ones.

With $3,000, the goal is not to be clever. It is to start building habits, stay invested, and give your money the best chance to grow over time. For me, these Vanguard ETFs tick all of those boxes.

The post 3 excellent Vanguard ETFs I would buy with $3,000 appeared first on The Motley Fool Australia.

Last week, I wrote about the advantages of active ASX ETFs and when they might be suitable. 

On Friday, the ASX 200 (ASX: XJO) officially entered into a bear market and took many passively managed index funds (that track the index) down with it. For example, BetaShares Australia A200 ETF (ASX: A200), which tracks the ASX 200, is down more than 10% this year. 

ASX ETFs, which track US indices, have performed even worse. Vanguard US Total Market Shares Index AUD (ASX: VTS) and Betashares Nasdaq 100 ETF (ASX: NDQ) are both down more than 15% this year. 

Investors may be looking at ways to preserve capital, and active ETFs may provide the answer. 

Given their active management style, ASX active ETFs often charge higher management fees than passive ETFs. However, according to the most recent Australian Investor Study, fees and costs associated with making an investment ranked among the top 3 considerations for selecting an investment. 

Accordingly, high management fees may deter many ASX investors. However, there are a few low-cost active ETF funds out there that may appeal. Let's explore two options.

Vanguard Global Value Equity ETF (ASX: VVLU)

Vanguard Global Value Equity Active ETF seeks to outperform the FTSE Developed All Cap Index (its benchmark) through active investment in global equity 'value' securities. It charges a management fee of 0.28%, which is particularly low for an active ETF. Investments are selected based on being undervalued, as determined by fundamental measures such as the price-to-earnings (P/E) ratio. 

As at 31 December 2024, the average P/E ratio in the portfolio was 11.24, which is significantly lower than its benchmark average of 22.05. Holding less expensive companies can provide downside protection during a market correction

As of 31 December 2024, the ETF was broadly diversified, with 870 holdings. Its top three holdings are Altria Group, AT&T, and General Motors Co. Vanguard suggests this ETF is most suited to long-term investors looking for both income and capital growth that have a higher tolerance for market volatility.

BetaShares Australian Hybrids Active ETF (ASX: HBRD)

Another ASX active ETF to consider is BetaShares Australian Hybrids Active ETF. This ETF aims to provide investors with attractive income returns from an actively managed, diversified portfolio of primarily hybrid securities. It pays income monthly at a rate expected to be significantly higher than cash and senior bonds, along with franking credits. However, this ETF comes with a slightly higher management fee than Vanguard Global Value Equity Active ETF, charging 0.55% per annum for management.

Foolish Takeaway

Passive income ETFs have been a winning strategy for many ASX investors. During a bull market, there may be very little incentive to seek out other strategies. However, during a downturn, investors may feel inclined to look around for investments that seek to preserve capital. This may be especially true for investors with shorter investment time horizons.

Over the past five years, the number of active ETFs on the ASX has risen dramatically from 37 in 2019 to 125 in 2024. Those interested in active management but conscious of high management fees might want to consider the Vanguard Global Value Equity Active ETF or the BetaShares Australian Hybrid Active ETF.

The post 2 Low Cost Active ASX ETFs to consider appeared first on The Motley Fool Australia.

Buying international shares typically involves selecting and signing up to a trading platform that has direct access to other exchanges and paying higher brokerage fees and, often, currency conversion fees.

Buying global shares held in ASX-listed ETFs is just so much easier.

And now, new data released by the ASX gives us a snapshot of which global share-based ASX ETFs are providing the best returns to Australian investors.

Here are the top five performers for total investor returns over the three years to 31 July.

The top 5 ASX ETFs that hold global shares

For the purposes of this article, we're going to focus on the ASX ETFs and managed funds that invest in global shares only based on a certain strategy.

This means we're excluding the index-based and sector-based ETFs and managed funds.

According to the data, here are the top five global shares ETFs or managed funds over the past three years:

• The Vanguard Global Value Equity Active ETF (Managed Fund) (ASX: VVLU) ETF returned an average of 23.61% per annum. This includes reinvested dividends, which have historically averaged a yield of 4.39%.
• Vaneck Morningstar Wide Moat ETF (ASX: MOAT) returned an average of 19.63% per annum. This includes reinvested dividends, which have historically averaged 6.96%.
• BetaShares Geared US Equity Fund Currency Hedged (Hedge Fund) (ASX: GGUS) returned an average of 18.62% per annum. This ETF does not earn dividends.
• The VanEck MSCI International Quality ETF (ASX: QUAL) ETF returned an average of 14.71% per annum. This includes reinvested dividends, which have historically averaged 1.1%.
• Global X Ultra Long Nasdaq 100 Hedge Fund (ASX: LNAS) returned an average of 14.69% per annum. This includes reinvested dividends, which have historically averaged 7.26%.

More about the No. 1 ETF

Vanguard Global Value Equity Active ETF (Managed Fund) is an actively managed ASX ETF. It aims to outperform its benchmark by investing in value shares from around the world.

Value shares are stocks that are undervalued based on the company's earnings, assets, and cash flow.

The VVLU ETF's benchmark is the FTSE Developed All-Cap in Australian Dollars Index.

Vanguard describes what type of investor this ASX ETF would suit:

Buy and hold investors seeking outperformance against the index through exposure to the value factor, long-term capital growth, some income, international diversification, and with a higher tolerance for the risks associated with share market volatility.

The top five holdings of the VVLU ETF are Comcast Corporation, Verizon Communications Inc, General Motors Co, Ford Motor Co, and Altria Group Inc.

The post Which global share-based ASX ETFs are delivering the best returns for investors? appeared first on The Motley Fool Australia.