If you’re considering getting exposure to the Fixed interest – Australia sector, the Vanguard Australian Government Bond Index ETF (ASX: VGB) might be one ASX ETF to watch in February.
How the VGB ETF fits into an ASX portfolio
The Vanguard VGB ETF provides investors with exposure to a portfolio of Australian Commonwealth Government bonds, state government bonds and bonds from treasury corporations.
VGB meets our minimum level for FUM
The Vanguard VGB ETF had $588.75 million of money invested when we last pulled the monthly numbers. Given VGB’s total funds under management (FUM) figure is over $100 million, the ETF has met our minimum criteria for the total amount of money invested, otherwise known as FUM. We draw the line at $100 million for ETFs in the Fixed interest – Australia sector because we believe that relative to smaller ETFs, achieving this amount of FUM de-risks the ETF.
What about management fees and costs?
Vanguard charges investors a yearly management fee of 0.2% for the VGB ETF. This means that if you invested $2,000 in VGB for a full year, you could expect to pay management fees of around $4.00.
For context, the average management fee (MER) of all ETFs covered by Best ETFs Australia on our complete list of ASX ETFs is 0.5% or around $10.00 per $2,000 invested. Keep in mind, small changes in fees can make a big difference after 10 or 20 years.
Next steps
Before buying any ETF based on what you read here on Best ETFs, check out our Vanguard VGB report – it’s completely free! Then, search our complete list of ASX ETFs to do a proper side-by-side comparison of your chosen sector or thematic.
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