How ASX investors can use the VHY ETF
The Vanguard VHY ETF provides exposure to the largest dividend-paying Australian shares, based on market capitalisation and forecast dividend yield. It tracks the FTSE Australian High Dividend Yield Index. The index excludes real estate investment trusts (REITs) and caps the total exposure to any sector/industry at 40%.
VHY could be used by ASX investors to get exposure to a mostly diversified portfolio of Australia’s largest public companies. These companies are likely to pay regular tax-effective dividends to their shareholders, including franking credits.
VHY meets our minimum market cap (FUM) criteria
The Vanguard VHY ETF had $2307.04 million of money invested when we last pulled the monthly numbers. Given VHY’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.
VHY ETF fees explained
Vanguard charges investors a yearly management fee of 0.25% for the VHY ETF. This means that if you invested $2,000 in VHY for a full year, you could expect to pay management fees of around $5.00.
For context, the average management fee (MER) of all ETFs covered by Best ETFs Australia on our complete list of ASX ETFs is 0.5% or around $10.00 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 VHY, keep in mind that this is just a brief introduction to the ETF. To supercharge your research, take a look at our free Vanguard VHY report. Then, consider searching our complete list of ASX ETFs for similar ETFs in the Australian shares sector to compare your options.