I think that Vanguard MSCI Australian Small Companies Index ETF (ASX: VSO) is an exciting ETF to consider for investors looking for a big more growth.
What is Vanguard?
Vanguard is a funds management business that is owned by its own investors. It was founded in 1975 and now has (or had) around AU$9.7 billion. It has 192 funds in the US, and 232 funds in markets outside the US. It’s a world leader in providing low cost ETFs.
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Why to consider Vanguard MSCI Australian Small Companies Index ETF
It’s one of the more expensive ETFs offered by Vanguard, though its management fee is still pretty low at 0.30% per year.
Why does it charge more? Because of the different ASX shares that it provides exposure to. ASX blue chips aren’t a bad option, but growth will create better returns over the longer term.
What are some of the shares it’s invested in?
The name of the ETF is ‘small’ but the bigger businesses in the ETF are not that small, but still have good growth potential.
Those top 10 holdings are: Northern Star Resources (ASX: NST), Evolution Mining (ASX: EVN), Afterpay (ASX: APT), Atlas Arteria (ASX: ALX), Saracen Mineral Holdings (ASX: SAR), Altium (ASX: ALU), JB Hi-Fi (ASX: JBH), Nextdc (ASX: NXT), Ansell (ASX: ANN) and Cleanaway Waste Management (ASX: CWY).
Gold mining companies are doing pretty well right now because of economic fears due to COVID-19. Technology shares like Afterpay, Altium and Nextdc are some of the more popular growth share options on the ASX.
The Vanguard MSCI Australian Small Companies Index ETF is actually invested in a total of 170 shares, so it offers plenty of diversification.
A decent dividend yield
Smaller growth shares are known for their capital growth. But this ETF actually has a trailing dividend yield of 3.56%, so it has the potential to deliver decent income when the economy returns to normal from COVID-19. Or at least a new normal, whatever that looks like.
However, if you just want technology growth shares it might be better to go for BetaShares S&P/ASX Australian Technology ETF (ASX: ATEC).