1. What does the VHY ETF do for investors?
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 could be used by ASX investors to get exposure to a mostly diversified portfolio of Australia’s largest public companies. These companies are likely to pay regular tax-effective dividends to their shareholders, including franking credits.
2. Funds under management (FUM)
The Vanguard VHY ETF had $2307.04 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.
3. Don’t forget about the fees & costs
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 0.51% 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.
Now what?
These are just a few of the considerations or factors you would need to look at when running the rule over the VHY ETF. Before you go any further, take a look at our free Vanguard VHY report. And while you’re at it, don’t forget to search our complete list of ASX ETFs.
