You might be sitting back and considering the Vanguard Australian Fixed Interest Index ETF (ASX: VAF) and thinking that April 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 VAF ETF provides investors with exposure to a portfolio of Australian Commonwealth Government bonds, state government bonds and bonds from treasury corporations, as well as some investment-grade corporate debt.
The VAF ETF could be used by investors when building out the core of a diversified investment portfolio. It may also be used by investors seeking a regular income stream from relatively safe assets, or those looking to diversify from equities.
VAF’s FUM meets our hurdle
The Vanguard VAF ETF had $1379.2 million of money invested when we last pulled the monthly numbers. Given VAF’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.
Pay attention to yearly costs & fees
Vanguard charges investors a yearly management fee of 0.15% for the VAF ETF. This means that if you invested $2,000 in VAF for a full year, you could expect to pay management fees of around $3.00.
For context, the average management fee (MER) of all ETFs covered by Best ETFs Australia on our complete list of ASX ETFs is 0.51% or around $10.20 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 VAF, bear in mind that this is just an introductory glance at the ETF. To explore further, check out our free Vanguard VAF report. And for good measure, search our complete list of ASX ETFs for similar ETFs in the Fixed interest – Australia sector to do a good comparison.
