Like us, you might have noticed the Vanguard Global Minimum Volatility Active ETF (Managed Fund) ETF (ASX: VMIN) and think that now could be a good time to consider taking a closer look. Here’s what ETF investors need to know.
1. What does the VMIN ETF do for investors?
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.
2. Funds under management (FUM)
The Vanguard VMIN ETF had $11.8 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.
3. Don’t forget about the fees & costs
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.
These are just a few of the considerations or factors you would need to look at when running the rule over the VMIN ETF. Before you go any further, take a look at our free Vanguard VMIN report. And while you’re at it, don’t forget to search our complete list of ASX ETFs.
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