• Skip to primary navigation
  • Skip to main content

ETF Bloke

Australian ETF Investing Explained

  • ETF Investing Guide
  • The Best ETFs
    • Best Australian ETFs
      • Australian Shares
      • International Shares
      • Emerging Market Shares
      • Australian Property REITs
      • International Property REITs
      • Commodities
      • Gold
      • Australian Bonds
      • International Bonds
    • Best International ETFs
      • VGS Review
      • IWLD Review
      • VTS Review
      • IVV Review
      • IOO Review
      • VGAD Review
    • Best Australian REITs
      • VAP Review
      • DJRE Review
      • MVA Review
      • SLF Review
    • Best Ethical ETF
      • VESG Review
      • ETHI Review
      • FAIR Review
      • GRNV Review
      • ESGI Review
      • UBW Review
      • UBA Review
  • Aussie ETF Portfolios
    • Lazy Portfolio
    • All Australian Portfolio
    • Vanguard Portfolios
    • ETF Bloke’s Portfolio
  • Blog
  • About
    • Contact

Should I invest in Vanguard ETFs or Index Funds?

October 9, 2019 By ETF Bloke 2 Comments

For almost every Vanguard Index Fund available in Australia there are multiple ways that you can invest. It can be tricky to figure out whether it is best to invest in an ETF vs Index Fund.

Typically Vanguard offers the following investment options:

  • ETF
  • Wholesale Fund
  • Retail Fund

But how do you choose which is the best option for you?

Here I look at the three things you need to consider before committing to investing in Vanguard’s products:

  • Management Fees
  • Minimum Investment Requirements
  • How to invest in ETFs vs Index Funds

Find out whether an ETF or Index Fund is right for you to invest in

Which is cheaper: ETFs or Index Funds?

Vanguard ETFs are MUCH CHEAPER than the corresponding Index fund!

Not only that, but ETFs are easier to buy too. You can simply buy them through your broker like you would any other share.

Don’t believe me?

Let me give you an example straight from the Vanguard website:

The image shows the three different ways to buy into the Vanguard Australian Shares Index Fund and the associated fees:

  • ETF
    • 0.14% pa. Management Fee
    • No minimum investment
    • Can be bought on the ASX. Ticker code: VAS
  • Wholesale Fund
    • 0.18% pa. Management Fee
    • $500,000 minimum investment
    • Can only be bought through Vanguard directly
  • Retail Fund
    • 0.75% pa.
    • $5,000 minimum investment
    • Can only be bought through Vanguard directly

Read my advice on how to minimise fees when buying Australian ETFs.

What is the minimum investment requirement for an Index Fund vs ETF?

All things are not made equal in the world of Vanguard. Just like in the real world Vanguard provides discounts based on economies of scale.

Well at least they do for their Index Funds, their ETFs are a different matter as you will see below.

Yes there are multiple ways to invest in Vanguard’s Index Funds.

BUT you may not meet the minimum investment requirement to allow you to buy into one of the Index Funds in the first place!

  • Wholesale Fund
    • $500,000 minimum investment
  • Retail Fund
    • $5,000 minimum investment

Don’t have $5,000 laying around?

Don’t worry.

Here is the minimum investment requirement for Vanguard’s ETFs.

  • ETF
    • $0

That’s right, there is no minimum!

Because ETFs are bought on the share market you can buy as many or as few as you can afford.

Or at least as few as your broker will allow you to (brokers typically require a minimum of $500 to make a trade, although this is changing with the introduction of brokers such as Robinhood)

NOTE: Anecdotally I have heard that if you call Vanguard directly and offer to invest at least $100k AUD they will give you access to the wholesale index fund. YMMV.

How do I invest in ETFs or Index Funds?

If you are buying the ETF it is simple.

Just log into your broker and type in the corresponding ticker code for what you want to buy.

See my step by step guide of how to buy an ETF here.

If you are buying into the Index Fund, well that is going to require some work from your end.

First you will need to open an account with Vanguard.

This will require some paperwork.

Once your account is open you will then need to transfer the funds that you want to invest to Vanguard.

Vanguard will then invest your funds into the Index Fund of your choice.

Recommendation: ETF vs Index Fund?

From above you can start to get an understand as to why ETF’s are such a popular way to invest.

  • ETFs have the lowest management fees
  • There are no minimum investment requirements
  • ETFs can be bought through your broker like any other share

And of course the most important recommendation anyone can give.

I personally invest using Vanguard ETF’s.

And they don’t pay me to say that!

What to know more? Find out what I recommend as the Best ETFs to buy in Australia.

Filed Under: ETF Investing

Reader Interactions

Comments

  1. J.D. says

    October 21, 2019 at 4:27 pm

    You might like to note that if you call them up they will let you into the wholesale fund for 100k instead of 500k

    Reply
    • ETF Bloke says

      October 22, 2019 at 4:43 pm

      Thanks for the tip JD!

      I do have a note in the article that mentions that I have heard that you can invest in the Vanguard wholesale index fund with only $100k if you give them a call directly. Glad to hear you have confirmed the same with Vanguard yourself. It is a good point and hopefully your comment helps make this clearer!

      Reply

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

  • Facebook
  • Pinterest
  • Twitter

Information provided by ETF Bloke is general in nature and does not take into consideration your personal financial situation. It is for educational purposes only and does not constitute formal financial advice. Remember, the value of any investment can go down as well as up. Before acting, you should consider seeking independent personal financial advice that is tailored to your needs.

Copyright © 2023 · ETF Bloke


  • Disclaimer
  • Contact
  • Privacy Policy