You might be sitting back and considering the Vanguard Australian Shares High Yield ETF (ASX: VHY) and thinking that February could be as good of a time as any to take closer look. Here’s how we would start our research.
Find out what the ETF does
The Vanguard VHY ETF provides exposure to the largest dividend-paying Australian shares, based on market capitalisation and forecast dividend yield. It tracks the FTSE Australian High Dividend Yield Index. The index excludes real estate investment trusts (REITs) and caps the total exposure to any sector/industry at 40%.
VHY’s FUM meets our hurdle
The Vanguard VHY ETF had $1348.65 million of money invested when we last pulled the monthly numbers. Given VHY’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 Australian shares sector because we believe that relative to smaller ETFs, achieving this amount of FUM de-risks the ETF.
Pay attention to yearly costs & fees
Vanguard charges investors a yearly management fee of 0.25% for the VHY ETF. This means that if you invested $2,000 in VHY for a full year, you could expect to pay management fees of around $5.00.
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.
Our takeaway
If you’re thinking about investing in VHY, bear in mind that this is just an introductory glance at the ETF. To explore further, check out our free Vanguard VHY report. And for good measure, search our complete list of ASX ETFs for similar ETFs in the Australian shares sector to do a good comparison.
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