On the ASX, the ETF Securities S&P Biotech ETF (ASX: CURE) and Perennial Value/eInvest Future Impact Small Caps Fund (Managed Fund) ETF (ASX: IMPQ) are two ASX ETFs worthy of closer inspection.
What the ETF Securities CURE does for investors
The ETFS CURE ETF provides investors with exposure to the US biotechnology sub-industry within the health care sector. CURE adopts an equally weighted strategy, which allocates greater exposure to small and mid-cap shares compared to a market capitalisation weighted approach.
As at the end of last month, the CURE ETF had $8.84 million of money invested. Since its funds under management (FUM) or ‘market cap’ figure of less than $100 million, it’s important to consider if this ETF is still too small. At Best ETFs we say an ETF with more than $100 million invested is typically more sustainable than one with less than $100 million (at least). However, there are exceptions to this rule of thumb, especially if the ETF issuer/provider is committed to growing the ETF’s FUM to the point where it becomes profitable.
Fees & costs
The yearly management fee on the CURE ETF is 0.45%. The issuer, ETF Securities, takes this out automatically.
What this fee means is, if you invested, say, $2,000 in the CURE ETF for a full year you could expect to pay management fees of around $9.00. That’s pretty low. But keep in mind this fee is different from the fee you pay to your brokerage provider (e.g. CommSec, NabTrade, SelfWealth, etc.) to buy or sell the ETF. Importantly, you should also be mindful of the ‘spread‘ for the ETF.
Is the ETF too expensive?
The easiest way to know if the ETF is too costly is to compare it with other ETFs in the same sector, and against the industry average. The average management fee (MER) across all of the ETFs covered by Best ETFs Australia is 0.54%, which is around $10.80 per $2,000 invested, so the CURE ETF has a lower-than-average fee — that’s a good thing. Keep in mind, small changes in fees can make a big difference after 10 or 20 years. You should read the CURE Product Disclosure Statement (PDS) because it has the complete and updated information on all fees.
Side note: did you know you can access our full review of the CURE ETF by clicking here
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Why does the Perennial Value/eInvest IMPQ ETF do?
The eInvest IMPQ Fund provides actively-managed exposure to Australian and New Zealand-listed small caps. IMPQ also focuses on investing in companies with positive environmental, social and governance (ESG) outcomes.
At the end of April 2020, IMPQ’s FUM stood at $1.3 million. With less than $100 million invested, it’s important to consider if this ETF is still too small and you should wait to buy in. If you’re worried about the size of the ETF, consider comparing it alongside some of the other Active ETF (e.g. ETMF) sector ETFs, using our full list.
Are IMPQ’s fees too high?
Perennial Value/eInvest charge a yearly management fee of 0.99% for the IMPQ ETF. Meaning, with $2,000 invested for 12 months you can expect to pay a base management fee of around $19.80.
The management fee is above the average for all ETFs on our radar, but keep in mind the ETF may be able to justify it.
If you want to learn more about the IMPQ ETF, you should know that you can access our free investment report.
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