How an Aussie (or Kiwi!) investor can use the VGAD ETF
The Vanguard VGAD ETF provides exposure to listed companies from developed markets around the world excluding Australia. This ETF is hedged to Australian dollars to minimise the impact of currency fluctuations.
According to our most recent data, the VGAD ETF had $1763.08 million of money invested. With VGAD’s total funds under management (FUM) figure over $100 million, the ETF meets our team’s minimum investment criteria for FUM levels. As a general rule, our team draws the line at $100 million for ETFs in the International shares sector because we believe that, relative to smaller ETFs, achieving this amount of FUM lowers the chance that the ETF issuer will close the ETF.
Fees to consider
According to our numbers, the annual management fee on the VGAD ETF is .21%. The issuer, Vanguard, collects this fee automatically.
Meaning, if you invested $2,000 in the VGAD ETF for a full year you could expect to pay management fees of around $4.20. This fee is different from the fee you pay to your brokerage provider (e.g. CommSec, NabTrade, SelfWealth, etc.), which is the fee to buy or sell the ETF. In addition to a management fee charged by the issuer, be mindful to check the ‘spread‘ for the ETF.
A fee comparison
Fees aren’t the only key consideration for ETF investors, but it’s an easy thing to do. To understand if the ETF you’re looking at is too costly, compare it with other ETFs from the same sector, and against the industry average. For example, the average management fee (MER) across all of the ETFs covered by the Best ETFs Australia team was 0.51%, which is $10.20 per $2,000 invested. Keep in mind that small changes in the fees paid can make a big difference after 10 or 20 years. You should read the VGAD Product Disclosure Statement (PDS), available on the ETF issuer’s website, because it will detail the fees, tax implications and the latest information.
You can get a copy of our free investment review when click here to see the VGAD ETF report.
Key facts about the AAA ETF
The BetaShares AAA ETF provides investors with exposure to Australian cash, without the need to open a bank account or have capital locked up in a term deposit.
With our numbers for July 2022, AAA’s FUM stood at $1831.03 million. Since the AAA’s FUM is over $100 million, our investing team would say the ETF has met our minimum criteria for the total amount invested, otherwise known as FUM. A very sustainable ETF in the Index sector should be able to scale well and become profitable for the ETF issuer.
A look at the AAA ETF fee load?
BetaShares, the ETF issuer, charges a yearly management fee of 0.18% for the AAA ETF. Meaning, if you invest $2,000 for a full year from now you can expect to pay a management fee of around $3.60.
This management fee is below the average for all ETFs on our Best ETFs Australia list of ETFs. However, you might still be able to find a cheaper ETF for less.
Get the full AAA review available on our website by clicking this link to access our report.
