On the ASX, the ETF Securities FANG+ ETF (ASX: FANG) and Vaneck S&P/ASX MidCap 50 ETF (ASX: MVE) are two ASX ETFs that could be worthy of closer inspection.
1. ETF Securities FANG ETF (ASX:FANG) – what you need to know
The ETFS FANG ETF provides investors with exposure to the performance of the 10 most highly-traded next generation technology and tech-enabled companies listed on US stock markets. FANG adopts an equal weight strategy, meaning that it weights the shares within the portfolio equally – this differs from the more commonly used method of weighting by market capitalisation.
As at the end of last month, the FANG ETF had $14.72 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 FANG ETF is 0.35%. The issuer, ETF Securities, takes this out automatically.
What this fee means is, if you invested, say, $2,000 in the FANG ETF for a full year you could expect to pay management fees of around $7.00. 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 0.5%, which is around $10.00 per $2,000 invested. Small changes in fees can make a big difference after 10 or 20 years. To understand all of the fees, you should read the FANG Product Disclosure Statement (PDS), available on the ETF issuer’s website, because it has the complete and up-to-date information.
If you like the sound of the FANG ETF, view our free investment report.
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2. The basics of the Vaneck MVE ETF (ASX:MVE)
The VanEck MVE ETF provides exposure to a diversified portfolio of large Australian companies and is the only ETF tracking the S&P/ASX Midcap 50 Index in Australia. The MVE ETF is designed to capture the performance of the top 50 Australian midcap companies based on market cap, ranking from 51 to 100.
At the end of May 2020, MVE’s FUM stood at $114.53 million. With MVE’s FUM over $100 million, we say the ETF has met our minimum criteria for the total amount invested. However, in reality, a very sustainable ETF in the Index sector should be able to scale well beyond that amount.
Are MVE’s fees too high?
Vaneck charge a yearly management fee of 0.45% for the MVE ETF. Meaning, with $2,000 invested for 12 months you can expect to pay a base management fee of around $9.00.
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.
To get our full FANG ETF review, click here now.
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