The Vanguard Australian Shares Index ETF (ASX: VAS) is one of the most popular ways for investors to get exposure to ASX shares. But, does it offer investors a good way to invest?
At the end of October 2022, this exchange-traded fund (ETF) was $11.4 billion in size, making it a sizeable player in the ASX share market.
The idea of this ETF is that it aims to track the return of the S&P/ASX 300 Index (ASX: XKO). That's a group of 300 of the largest businesses on the ASX.
It's provided by Vanguard. It operates quite differently to its main competitors.
Vanguard is owned by the investors that use its services, rather than big shareholders.
Vanguard says that this "unique mutual structure aligns our interests with those of our investors and drives the culture, philosophy, and policies throughout the Vanguard organisation worldwide."
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A focus on low-cost investing
The ETF provider explains the benefits of lower fees and how it's able to provide its cheap service:
Investors can't control the markets, but they can control the costs of investing. Providing low-cost investments isn't a pricing strategy for us. It's how we do business.
We can keep costs low because of our unique ownership structure in the United States, which allows us to return profits to investors through lower costs.
Vanguard's scale also helps to keep costs low. As our assets under management increase globally, we can reduce expense ratios for the investors in our funds.
Vanguard Australian Shares Index ETF management fee
As of October 2022, the ETF charges investors an annual management fee of 0.10% per annum. There are 0% indirect costs.
In terms of investing in ASX shares, it isn't the cheapest ETF out there.
I'm thinking about the BetaShares Australia 200 ETF (ASX: A200). It has a management fee of just 0.07% per annum. That's slightly cheaper than Vanguard, though it's only invested in 200 ASX shares.
Are there any other cheaper ETFs?
The Vanguard Australian Shares Index ETF is certainly one of the lowest on the ASX.
But, there are a couple of ASX ETFs that are noticeably cheaper.
For example, there's the iShares S&P 500 ETF (ASX: IVV) which has an annual management fee of 0.04%. This investment gives investors access to 500 of the biggest US-listed businesses.
A Vanguard offering has an even lower management fee with one particular fund. The Vanguard US Total Market Shares Index ETF (ASX: VTS) has an annual management fee of just 0.03%.
Foolish takeaway
In terms of fees, Vanguard Australian Shares ETF is one of the cheapest on the ASX. Definitely not expensive. However, there are a few other options that are even cheaper. But, fees are just one part of the investment equation – the net returns are probably the most important element.
