How the VSO ETF fits into an ASX portfolio
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 level for FUM
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.
What about management fees and costs?
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.
Next steps
Before buying any ETF based on what you read here on Best ETFs, check out our Vanguard VSO report – it’s completely free! Then, search our complete list of ASX ETFs to do a proper side-by-side comparison of your chosen sector or thematic.