Exchange traded funds (ETFs) don't just allow you to invest in certain sectors and indices, they also provide investors with the opportunity to focus on particularly strategies.
One of those is income. But which ASX ETFs might be best for income investors?
While best is subjective, listed below are the ETFs that offer the biggest dividend yields right now.
To be included, I have only selected ETFs that have at least $1 billion in funds under management (FUM). Here they are:
iShares Core S&P/ASX 200 ETF (ASX: IOZ)
The iShares Core S&P/ASX 200 ETF is one of the largest ETFs on the Australian share market with $4 billion of FUM. It provides investors with low-cost access to the 200 largest companies on the ASX in a single fund.
The ETF pays dividends quarterly and based on its current net asset value, trades with a trailing 6.1% dividend yield and 74% franking.
Vanguard Australian Property Securities Index ETF (ASX: VAP)
The Vanguard Australian Property Securities Index ETF seeks to track the return of the S&P/ASX 300 A-REIT Index before fees, expenses, and tax. Vanguard notes that the property sectors in which the ETF invests include retail, office, industrial and diversified. It believes the fund offers potential long-term capital growth and tax-effective income that may include a tax-deferred component.
The Vanguard Australian Property Securities Index ETF currently trades with a 4.3% dividend yield.
Vanguard Australian Shares High Yield ETF (ASX: VHY)
As its name implies, the Vanguard Australian Shares High Yield ETF gives investors exposure to a diverse group of ASX shares that have higher forecast dividend yields relative to the rest of the market.
At present, with 98.2% franking, the Vanguard Australian Shares High Yield ETF trades with an estimated forward grossed up dividend yield of 5.8%.
Vanguard Australian Shares Index ETF (ASX: VAS)
Finally, the Vanguard Australian Shares Index ETF is the largest on the ASX with $12 billion of FUM. It has been designed to mirror the S&P/ASX 300 index. This means investors will be buying a piece of large companies such as Telstra Corporation Ltd (ASX: TLS) and smaller companies like Accent Group Ltd (ASX: AX1) and Dicker Data Ltd (ASX: DDR).
At present, the ETF offers investors a dividend yield of 4.2% with 89% franking.
