1. The Vanguard VDCO ETF (ASX:VDCO) ETF
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.
According to our most recent data, the VDCO ETF had $127.42 million of money invested. With VDCO’s total funds under management (FUM) figure over $100 million, the ETF meets our team’s minimum investment criteria for FUM levels. As a general rule, our team draws 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 lowers the chance that the ETF issuer will close the ETF.
Fees to consider
According to our numbers, the annual management fee on the VDCO ETF is 0.27%. The issuer, Vanguard, collects this fee automatically.
Meaning, if you invested $2,000 in the VDCO ETF for a full year you could expect to pay management fees of around $5.40. This fee is different from the fee you pay to your brokerage provider (e.g. CommSec, NabTrade, SelfWealth, etc.), which is the fee to buy or sell the ETF. In addition to a management fee charged by the issuer, be mindful to check the ‘spread‘ for the ETF.
A fee comparison
Fees aren’t the only key consideration for ETF investors, but it’s an easy thing to do. To understand if the ETF you’re looking at is too costly, compare it with other ETFs from the same sector, and against the industry average. For example, the average management fee (MER) across all of the ETFs covered by the Best ETFs Australia team was 0.5%, which is $10.00 per $2,000 invested. Keep in mind that small changes in the fees paid can make a big difference after 10 or 20 years. You should read the VDCO Product Disclosure Statement (PDS), available on the ETF issuer’s website, because it will detail the fees, tax implications and the latest information.
Want to hear more about the VDCO ETF? View our free investment review.
2. The BetaShares DGGF ETF (ASX:DGGF) ETF
The BetaShares DGGF ETF provides investors with a diversified portfolio of ethical assets, including shares and bonds, by screening out unethical industries and giving preference to sustainable companies.
With our numbers for Oct 2020, DGGF’s FUM stood at $3.68 million. Given it has less than $100 million invested, ask yourself (or your adviser) if the ETF is still too small (and if you should wait to buy into it). If you’re concerned the ETF might not be established enough, compare it alongside one of the other Diversified sector ETFs, using our full list of ETFs.
Are the fees for the DGGF ETF bad?
BetaShares, the ETF issuer, charges a yearly management fee of 0.26% for the DGGF ETF. Meaning, if you invested $2,000 for a full 12-month period you could expect to pay a base management fee of around $5.20.
This management fee is below the average for all ETFs on our Best ETFs Australia list of ETFs. However, you might still be able to find a cheaper ETF for less.
Want to know more? Get our team’s free DGGF ETF review. Simply click here now.