What the Vanguard VDCO ETF actually does
The Vanguard VDCO ETF provides investors with exposure to a portfolio of other Vanguard funds/ETFs. Meaning, it’s an ETF which invests only in other funds/ETFs — in this case, it only invests in funds managed by its own provider, Vanguard. This ETF gives investors exposure to multiple asset classes with a single purchase, and is designed to be a diversified portfolio in itself.
The VDCO ETF might be used by investors who are wanting a simple way to establish a diversified portfolio with conservative weightings. This ETF may suit investors who are more focused on income than capital growth.
VDCO meets our minimum FUM criteria
The Vanguard VDCO ETF had $235.57 million of money invested when we last pulled the monthly numbers. Given VDCO’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 Diversified ETF sector because we believe that relative to smaller ETFs, achieving this amount of FUM de-risks the ETF.
Don’t forget VDCO’s fees
Vanguard charges investors a yearly management fee of 0.27% for the VDCO ETF. This means that if you invested $2,000 in VDCO for a full year, you could expect to pay management fees of around $5.40.
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.
What to do next
If you’re weighing up investing in the VDCO ETF, keep in mind that this is just a brief introduction. Indeed, before doing anything, take a look at our free Vanguard VDCO report. And while you’re at it, consider searching our complete list of ASX ETFs for similar ETFs in the Diversified ETF sector to compare your options.
