Tuesday, 28 May 2013

Vanguard Income ETF

I’m always on the look-out for ways to diversify my portfolio. I also like to keep costs to a minimum.

I was therefore interested to see low-cost index tracker provider, Vanguard have recently launched 4 new exchange traded funds (ETFs) - here’s a link.

As an income investor, the main item of interest is the FTSE All World High Dividend Yield (VHYL). The index consists of over 1000 higher yielding large and mid-cap companies listed all around the world. The largest sector of 33% is USA followed by UK 13.2%, Australia 6.3%, Switzerland 5.7% - also France, Canada, Germany, Japan, China and Brazil.

The target yield is 4% and I assume the distribution will be twice yearly. The annual costs are very competitive at just 0.29% TER.

One advantage of holding this ETF within my Sippdeal ISA is the avoidance of the £50 per annum custody fee levied on Vanguard funds. Also, there is no 0.5% stamp duty to pay on purchase.

I think this could be worth adding to the portfolio. It would be interesting to see how a passive income index tracker compares with a managed global investment trust like Murray International.

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