November watchlist: The Vanguard Global Minimum Volatility Active ETF (Managed Fund) ETF (ASX:VMIN)

Getting exposure to the International shares sector has never been easier thanks to ASX ETFs like the Vanguard Global Minimum Volatility Active ETF (Managed Fund) ETF (ASX: VMIN). That said, no matter how easy it seems to be, we think it’s still important to do your own ETF review.

How the VMIN ETF could be used in portfolios

The Vanguard VMIN Fund is an actively-managed ETF which aims to provide lower volatility than the broader global equity market by investing across many markets and industries.
The VMIN Fund could be used by investors who are seeking long-term capital growth with lower volatility and regular distributions. It may suit an investor who needs global exposure but does not have the risk tolerance to take on the usual volatility of global markets.

The VMIN ETF is yet to reach our FUM target

The Vanguard VMIN ETF had $15.83 million of money invested when we last pulled the monthly numbers. With a funds under management (FUM) or ‘market cap’ figure of less than $100 million, it’s important to consider if this ETF is still too small.

We say an ETF with more than $100 million invested is typically more sustainable than one with less than $100 million (at least). This is because if an ETF is too small, it may not be sustainable for an ETF issuer/provider, such as Vanguard, to continue to operate it.

That said, there are exceptions to this rule of thumb, especially if the ETF issuer is committed to growing the ETF’s FUM to the point where it becomes profitable.

VMIN’s fees & costs explained

Vanguard charges investors a yearly management fee of 0.28% for the VMIN ETF. This means that if you invested $2,000 in VMIN for a full year, you could expect to pay management fees of around $5.60.

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.

Bottom line

This is just a quick overview of the VMIN ETF. Before ‘testing the depth of the water with both feet’ so to speak, be sure to read the VMIN ETF’s Product Disclosure Statement (PDS), available on the Vanguard website, or speak to your financial adviser. For another handy resource, take a look at our Vanguard VMIN report. You can also use our complete list of ASX ETFs to search for a few different ETFs in the sector and conduct a side-by-side comparison using everything you’ve learned here.