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VSO

$69.77-0.47%Small Caps56/100
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Vanguard MSCI Australian Small Companies Index ETF · Vanguard

Data as at 29 March 2026

TL;DR

Tracks Australian small-cap companies using the MSCI methodology. Covers similar companies to ISO but with MSCI's index selection rather than S&P's, creating some differences in constituent companies.

MER (Annual Fee)
0.30%
#2 lowest in Small Caps
1Y Return
+12.5%
3Y Return (p.a.)
+9.4%
Dividend Yield
6.80%
Trailing 12 months
AUM
$1,179.9M
Assets under management
Avg Daily Turnover
$1.1M
Avg shares × unit price
Unit Price
$69.77
As at 29 March 2026
Provider
Vanguard
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Strategy

Follows the MSCI Australia Small Cap Index. Managed by Vanguard at 0.30% per year. Covers small Australian companies not included in the MSCI Australia Standard Index.

Top Holdings

Key Fact

VSO tracks the MSCI methodology while ISO tracks the S&P Small Ordinaries. Both cover the Australian small-cap universe but MSCI and S&P apply different liquidity and free-float screens that result in some portfolio divergence between the two funds.

Suited for

Vanguard investors who want to add small-cap Australian exposure alongside a core VAS position. VSO and ISO serve essentially the same purpose with slightly different index methodologies.

Risks

Same volatility and liquidity risks as ISO. Small-cap companies have less analyst coverage and more earnings uncertainty than large-cap companies. MSCI and S&P use different liquidity and free-float screens.

VSO Comparisons

ETFCheck Score56/100
Fees (40%)55
Fund Size (25%)51
Liquidity (20%)31
Yield (15%)100
How scores are calculated →
Other Small Caps ETFs
VISM
0.33% MER
46
ISO
0.25% MER
43View all Small Caps ETFs →

Frequently Asked Questions - VSO

Why does VSO use MSCI methodology instead of S&P, and does it matter for returns?+
VSO tracks the MSCI Australian Shares Small Cap Index, which uses different size breakpoints, rebalancing schedules, and free-float adjustments compared to ISO's S&P/ASX Small Ordinaries Index. In practice, both hold many of the same companies but with different weightings, creating modest return divergence - VSO returned 9.2% versus ISO's 8.4% over one year. MSCI's methodology tends to capture slightly different size segments at the margins, which can favour or penalise VSO depending on which market-cap bands are performing.
Is VSO's higher yield of 2.42% sustainable for income-focused Australian investors?+
VSO's 2.42% yield reflects the dividend policies of ASX small-cap companies at a point in time and should not be assumed as guaranteed. Small-cap dividends are inherently less stable than large-cap payouts, as smaller companies are more likely to cut or suspend distributions during earnings downturns. However, many ASX small caps do pay partially franked dividends, providing some tax efficiency. Income-focused investors should view VSO's yield as supplementary within a diversified portfolio rather than relying on it as a primary income stream.
How does VSO fit alongside VAS in a Vanguard-only SMSF portfolio?+
VSO complements VAS (Vanguard Australian Shares Index ETF) by adding exposure to companies below the ASX 300's top 100 that VAS underweights or excludes. Together, they provide comprehensive ASX coverage across all market capitalisations. However, there is some overlap since VAS tracks the ASX 300 and includes many of VSO's larger holdings. SMSF trustees running an all-Vanguard strategy might allocate 80% VAS and 20% VSO to capture the small-cap premium without excessive concentration in less liquid stocks.
What is VSO's MER of 0.30% buying compared to picking individual ASX small caps?+
VSO's 0.30% MER provides instant diversification across approximately 160 small-cap stocks, something nearly impossible to replicate cost-effectively through direct share purchases. Buying individual ASX small caps involves brokerage per trade, research time, and significant single-stock risk from companies with limited analyst coverage. VSO also handles rebalancing as companies graduate to the ASX 100 or fall out of the small-cap universe. For most Australian investors, particularly SMSF trustees, 0.30% is a modest cost for professionally managed, broad small-cap market access.