How to research the Vanguard MSCI Australian Large Companies Index ETF (ASX:VLC)

You might be sitting back and considering the Vanguard MSCI Australian Large Companies Index ETF (ASX: VLC) and thinking that January could be as good of a time as any to take closer look. Here’s how we would start our research.

Find out what the ETF does

The Vanguard VLC ETF provides exposure to the MSCI Australian Shares Large Cap Index. This index is a ‘free float-adjusted market capitalization index’ which provides investors with exposure to the largest companies on the ASX.
The VLC ETF could be used by investors looking to gain focused exposure to Australia’s largest public companies. These Australian companies are likely to grow their profits over time and have a track record of paying regular, tax-effective dividends to their shareholders.

VLC’s FUM meets our hurdle

The Vanguard VLC ETF had $151.42 million of money invested when we last pulled the monthly numbers. Given VLC’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.

Pay attention to yearly costs & fees

Vanguard charges investors a yearly management fee of 0.20% for the VLC ETF. This means that if you invested $2,000 in VLC 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 0.51% 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.

Our takeaway

If you’re thinking about investing in VLC, bear in mind that this is just an introductory glance at the ETF. To explore further, check out our free Vanguard VLC report. And for good measure, search our complete list of ASX ETFs for similar ETFs in the Australian shares sector to do a good comparison.

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