Is it time to invest in ETFs such as the Betashares Australian Sustainability Leaders ETF (ASX: FAIR) and Vaneck Australian Bank ETF (ASX: MVB)? These two ASX ETFs operate in the Australian shares sector, and aim to make investing in it as convenient as possible.
1. The Betashares FAIR ETF (ASX:FAIR)
The BetaShares FAIR ETF provides exposure to the largest Australian shares and focuses on companies which operate ethically. FAIR has been certified by the Responsible Investment Association Australasia (RIAA), as part of the Responsible Investment Certification Program.
As at the end of last month, the FAIR ETF had $515 million of money invested. Given FAIR’s total funds under management (FUM) figure is over $100 million, the ETF has met our minimum criteria for the total amount of money invested, otherwise known as FUM. We draw the line at $100 million for ETFs in the Australian shares sector because we believe that relative to smaller ETFs, achieving this amount of FUM derisks the ETF.
Fees & costs
The yearly management fee on the FAIR ETF is 0.49%. The issuer, Betashares, takes this out automatically.
What this fee means is, if you invested, say, $2,000 in the FAIR ETF for a full year you could expect to pay management fees of around $9.80. 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 FAIR Product Disclosure Statement (PDS), available on the ETF issuer’s website, because it has the complete and up-to-date information.
These are just the basics of the FAIR ETF. To learn more, access our free investment report.
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2. The Vaneck MVB ETF (ASX:MVB)
The VanEck MVB ETF provides focused exposure to Australia’s largest industry, the banking sector. This is a low-cost way to invest in the Australian banking industry through a single fund.
At the end of May 2020, MVB’s FUM stood at $46.86 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 Index sector ETFs, using our full list.
Are MVB’s fees too high?
Vaneck charge a yearly management fee of 0.28% for the MVB ETF. Meaning, with $2,000 invested for 12 months you can expect to pay a base management fee of around $5.60.
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.
Before you read the Product Disclosure Statement (PDS) or speaking to your financial adviser about the FAIR ETF report. Take a look at our free investment report.
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