Exchange Traded Funds (ETFs)

Choosing between ETFs and traditional index funds

Vanguard’s ETFs are one of two ways to invest with us, you can also use our traditional index managed funds. Vanguard has been managing investments for more than 10 years for Australians. Our ETFs and their equivalent managed index funds own the same underlying assets. So for investors, it comes down to which method best suits your particular circumstances.

When deciding between and ETF or traditional fund, you should consider:

  • If you have, or are prepared to open, an account with a sharemarket broker. You will need a brokerage account to buy and sell ETFs. If you invest using a financial planner, they can access either index managed funds or ETFs via administration platforms such as master trusts and wrap access.
  • How often you invest. Brokerage fees apply when buying ETFs on the sharemarket, however contributions to a traditional (managed) index fund do not attract any fees (other than the applicable entry and exit spreads). So ETFs may not suit investors who make ongoing, small contributions.
  • The importance of trading to you. Trading flexibility is a key benefit of ETFs, but if this flexibility is not important to you the added brokerage costs of investing in ETFs may not be worthwhile for you.

 Choosing between an ETF or Managed Index Fund?

Exchange Traded Funds are suited to investors who:

  • Have an ASX broker account
  • make large or irregular investments
  • require trading flexibility

Managed index funds are suited to investors who:

  • do not have an ASX broker account
  • make ongoing, small contributions
  • do not require trading flexibility

 

 

To find out more about our managed index funds click here.

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More about ETFs

 

 

Find out more

Call Vanguard Client Services on 1300 655 888, 8:00am to 6:00pm, Monday to Friday (Melbourne time)   or email us.

 

 

 

 

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