Australian (ASX) Stock Market Forum

ETF return vs the index


Grad Accountant
6 May 2012

I was thinking of investing in some ETF's which I mentioned to a friend of mine. He told me that he invested in ASX:IVV last December and has just sold them because the return did not match the index - it was in fact something like 5% below the index, which seems strange to me. My understanding was that ETF's would very closely match the return of the index that it followed.

I did a quick comparison based on a BUY date of ASX:IVV at 20 December 2016, price per Google Finance is $315.04. Price as of today is $338.93. This equates to a return of 7.58%.

I've then done the same calc for the S&P500, for the same dates. 20 December 2016 price is $2,270.76. Price as of today is $2,582.30. This equates to a return of 13.72%.

The difference here is over 6% which is obviously significantly different. The only thought I have as to why they might be this different is the AUD/USD exchange rate. From my layman's perspective this seems plausible, considering AUD gained ground on USD during this time period.

If currency conversion does factor in when buying non-Australian ETF's, then is it possible to buy a hedged ETF to negate this added variable?

Yep - 6% currency, 2% divvies (which are probably sitting in a cash account)

See attached.

IHVV is the currency hedged etf


  • sp500 hedged.png
    sp500 hedged.png
    92.8 KB · Views: 38