What’s up with the Vanguard VSO ETF (ASX:VSO)?

If you’re looking for an ASX ETF in the Australian shares sector, chances are, the Vanguard MSCI Australian Small Companies Index ETF (ASX: VSO) is an ETF you’re considering. Here’s what you need to know.

How ASX investors can use the VSO ETF

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.

VSO meets our minimum market cap (FUM) criteria

The Vanguard VSO ETF had $723.46 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.

VSO ETF fees explained

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 0.51% 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.

Putting it all together

If you’re weighing up investing in VSO, keep in mind that this is just a brief introduction to the ETF. To supercharge your research, take a look at our free Vanguard VSO report. Then, consider searching our complete list of ASX ETFs for similar ETFs in the Australian shares sector to compare your options.

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