Vanguard's new ETFs add to its cheap-as-chips range

I am sometimes asked whether Monevator is a stealth site run by Vanguard to promote its activities in the UK.

Chance would be a fine thing!

So far not one of the pennies collected by the Monevator Empire has sallied forth from Vanguard’s coffers, so far as I’m aware.

Indeed, it’s a bit of a sad reflection of the UK financial media that some people’s first thought is that if you’re writing about a product or investment, you must be being paid by that company to do so.

Now don’t get me wrong – I’d absolutely love the opportunity to run Vanguard advertising on this website.

But even in the absence of such a pleasant happenstance, we’ll continue to write about the best products and services for the likes of you and me – and right now that means heavy lashings of whatever is being served up by the private investor friendly Vanguard.

Cheap as chips

My co-blogger The Accumulator spent the weekend helping his extended family with its finances – whether by going through their accounts or offloading their junk at a car boot sale he didn’t say – and so he requested a week off posting duties.

I know! Slacker.

In his stead I’d like to draw your attention to four new ETFs that Vanguard has just brought to the UK market.

ETF name Ticker TER
Vanguard FTSE Developed Europe UCITS ETF VEUR 0.15%
Vanguard FTSE Developed Asia Pacific ex Japan UCITS ETF VAPX 0.22%
Vanguard FTSE Japan UCITS ETF VJPN 0.19%
Vanguard FTSE All-World High Dividend Yield UCITS ETF VHYL 0.29%

Note: TER figures from Vanguard.

These Vanguard ETFs are all physically-backed funds – as opposed to the synthetic funds that some commentators consider more risky.

You can find out more information (including a prospectus and factsheet for each fund) at Vanguard’s website.

Rampant Vanguard-ism

The launch of these new ETFs seems a tad opportunistic for Vanguard.

I’ve heard more investors talking about Japan this year than in the previous five years put together, and now along comes a very cheap ETF from Vanguard that enables you to get exposure.

The Developed Europe ETF, with its TER of 0.15%, is also a very competitive offering. It’s certainly cheaper than its closest iShares equivalents, and with 499 holdings according to the factsheet I’m pretty sure it’s more diversified, too. (It does have over one-third of its money in UK shares, so keep that in mind when figuring out your overall asset allocation if your idea of Europe is more like UKIP’s!)

But I think that the new High Dividend Yield ETF could be the most interesting of the bunch, at a time when yield-chasing is still so rampant.

Holding over 1,000 globally distributed stocks (albeit with one-third of the index in the US, reflecting the large size of that market, and another 13% in the UK, perhaps on account of our emphasis on yield) this new ETF could be a cheap one-shot way to create a diversified equity income stream.

The factsheet is touting a forecast dividend yield of 4%. Time will tell if that’s what anyone purchasing this ETF actually receives.

Indeed as this ETF is brand spanking new, you’ll probably want to look into the FTSE Index it’s based on to best understand what you’re buying.

Of course, whether you ought to pursue value-tilted indices such as higher yield versus vanilla market cap weighting with your investing is an open question.

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