What is the VSO ETF used for?
The Vanguard VSO ETF provides exposure to a diversified portfolio of Australian small caps and tracks the MSCI Australian Shares Small Cap Index. This is a low-cost way to access the performance of Australian small-cap shares through a single fund.
The VSO ETF could be used by investors to get exposure to a broad basket of smaller Australian-listed companies, which are likely to grow their profits over time. Navigating away from the largest ASX companies removes a lot of the exposure to the financial sector and could diversify your Australian portfolio allocation.
Keep an eye on FUM
The Vanguard VSO ETF had $674.59 million of money invested when we last pulled the monthly numbers. Given VSO’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.
Fees and costs for investors
Vanguard charges investors a yearly management fee of 0.30% for the VSO ETF. This means that if you invested $2,000 in VSO for a full year, you could expect to pay management fees of around $6.00.
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 VSO ETF. Before doing anything, take a look at our Vanguard VSO report – it’s free. While you’re at it, don’t forget to search our complete list of ASX ETFs.
