The Vanguard Group is one of the largest asset management groups in the world. The American company is best known for the exchange-traded funds (ETFs) it issues, but it also manages assets of pension funds and insurers.
An ETF is a financial product that follows an index, commodity, bond or a composition of products. With an ETF you invest in a ‘basket’ of different investment products. This way you invest in a more diversified way, which reduces your risk. Keep reading to find out more about ETFs and the five most traded Vanguard ETFs via our platform.
Most traded Vanguard ETFs
Vanguard S&P 500 ETF USD
This is a distributing ETF where the dividend is paid to you, the investor. There is a quarterly rebalancing that looks at whether the ETF is still accurately tracking the underlying value of the index.
This ETF from Vanguard is by far the most traded Vanguard ETF on our platform. As the name of this ETF suggests, it tracks the S&P 500 index. With an investment in this ETF, you spread your investment across the 500 largest US companies.
Vanguard FTSE All-World UCITS ETF USD Dis
With this Vanguard ETF, you invest in companies from around the world. The ETF tracks the FTSE All-World index. An index that includes companies from the US, Japan, UK, China, Switzerland, Canada and France.
The total expense ratio that Vanguard charges on the ETF is 0.22%, and dividends are paid to shareholders.
Vanguard FTSE All-World UCITS ETF USD Acc
This All-World ETF tracks the same index as the All-World index mentioned above. It differs in the way dividend is distributed. It doesn’t pay out dividends to the shareholders, but it reinvests it. In this case, your share in the ETF will increase and it might give you a higher return in the future.
The total expense ratio that Vanguard charges on this ETF is also at 0.22%.
Vanguard FTSE All-World High Div Yield UCITS USD
This ETF from Vanguard tracks the FTSE All-World High Div Yield index. An index that selects companies from the 'regular' All-World index that pay out a high level of dividend. Whereas the FTSE All-World index tracks a total of 3784 companies, the FTSE All-World High Dividend Yield index tracks 1781 companies (as of May 31, 2022).
Incoming dividends are paid quarterly. The total expense ratio stands at 0.29%.
Vanguard FTSE Emerging Markets UCITS ETF USD
This ETF from Vanguard tracks the FTSE Emerging Index. An index that focuses on emerging economies. The companies included in this index are from China, Taiwan, India, Brazil, South Africa and Mexico and other countries.
Emerging economies can grow fast within a short period of time. If you are confident about the success of emerging economies, this ETF might be one for you.
The total expense ratio of this ETF stands at 0.29%.
How does Vanguard create an ETF?
ETFs are investment products that follow an index. To follow an index with a product such as an ETF, an asset manager must pay license fees to the issuer of the index. For example, the AEX is composed by Euronext. If Vanguard wants to issue an ETF based on the AEX, they will have to get a license with Euronext.
The index publisher determines which companies, commodities, bonds or other securities are included in an index. This does not mean that index publishers are not open to suggestions from asset managers. In some cases, indices are specially designed in consultation between index publishers and asset managers. These are often indices that, for example, follow a specific industry or sector, focus on a continent or commodity or focus on impact investing (think green or gender equality-focused ETFs).
After an index is set up an asset manager can determine whether they want to create an ETF that follows the index.
Reinvest or distribute dividends
An asset manager such as Vanguard determines, independently of the index, how the ETF handles dividends. An accumulating ETF reinvests the dividend received; a distributing ETF distributes the dividend to investors. The name of the ETF often states whether it is an accumulating (Acc) or distributing (Dist) ETF.
Physical and synthetic ETF
To set up the ETF, shares must be purchased or swap structures must be set up to gain access to the shares. In a physical ETF, Vanguard buys the shares from an index. Once owned, this is used to create the ETF. In a synthetic ETF, a swap structure is set up where the asset manager agrees with a third party (often a bank or other financial institution) that it will take over the value of shares without owning them itself.
What fees does vanguard charge over an ETF?
The costs that Vanguard makes for managing the ETF will be passed on to you, the buyer. Of course, an asset manager also wants to make a profit. Let's take the Vanguard S&P 500 UCITS ETF as an example. The total expense ratio (TOR) for this ETF is 0.07%. This means that if you invest €1,000 in this ETF, you will pay €0.70 annually to Vanguard.
The ETF setup ultimately determines how much fees you will pay to Vanguard. With any ETF, the goal is for the investment product to track the value of an index as closely as possible. In some cases, such as an equal weight ETF, more work is required to periodically rebalance stocks within an ETF. In that case, Vanguard will charge a higher TOR.
Buying Vanguard ETFs at DEGIRO
Would you also like to invest in ETFs from Vanguard? Our Core Selection includes several Vanguard ETFs that you can purchase, for which the commissions are on the house. Currency, external product and spread costs may apply. See the ETF Core Selection, conditions and fair use policy here.Open an account
The information in this article is not written for advisory purposes nor is it intended to recommend investments. Investing comes with risks. You may lose (part of) your investment. We advise you to only invest in financial instruments that match your knowledge and experience.