What is the VGB ETF used for?
The Vanguard VGB ETF provides investors with exposure to a portfolio of Australian Commonwealth Government bonds, state government bonds and bonds from treasury corporations.
The VGB 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 an equity portfolio.
Keep an eye on FUM
The Vanguard VGB ETF had $690.48 million of money invested when we last pulled the monthly numbers. Given VGB’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.
Fees and costs for investors
Vanguard charges investors a yearly management fee of 0.20% for the VGB ETF. This means that if you invested $2,000 in VGB for a full year, you could expect to pay management fees of around $4.00.
For context, the average management fee (MER) of all ETFs covered by Best ETFs Australia on our complete list of ASX ETFs is 0.5% or around $10.00 per $2,000 invested. Keep in mind, small changes in fees can make a big difference after 10 or 20 years.
Summary
These are just some of the considerations or factors you would need to look at when weighing up the VGB ETF. Before doing anything, take a look at our Vanguard VGB report – it’s free. While you’re at it, don’t forget to search our complete list of ASX ETFs.
