Got your analyst shoes on today? The BetaShares Global Agriculture ETF – Currency Hedged ETF (ASX: FOOD) and Vaneck Small Companies Masters ETF (ASX: MVS) are two ASX ETFs operating in the International shares and Australian shares sectors, respectively.
What does the FOOD do in a portfolio?
The BetaShares FOOD ETF provides investors with exposure to the performance of the largest agricultural companies in the world (excluding Australia), hedged into Australian dollars.
As at the end of last month, the FOOD ETF had $16.57 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 FOOD ETF is 0.57%. The issuer, BetaShares, takes this out automatically.
What this fee means is, if you invested, say, $2,000 in the FOOD ETF for a full year you could expect to pay management fees of around $11.40. 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 FOOD Product Disclosure Statement (PDS), available on the ETF issuer’s website, because it has the complete and up-to-date information.
The FOOD ETF might be one for the watchlist, but if you want to access our full ETF review, simply click here to get our full report – it’s free.
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The ins-and-outs of the MVS ETF
The VanEck MVS ETF provides exposure to a diversified portfolio of Australian small caps, with a focus on highly liquid, dividend-paying companies. This ETF tracks the MVIS Australia Small-Cap Dividend Payers Index.
At the end of May 2020, MVS’s FUM stood at $54.75 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 Yield/income sector ETFs, using our full list.
Are MVS’s fees too high?
Vaneck charge a yearly management fee of 0.49% for the MVS ETF. Meaning, with $2,000 invested for 12 months you can expect to pay a base management fee of around $9.80.
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.
Choosing between ETFs might seem easy, but it’s important to try and get it right the first time so you don’t end up having to chop-and-change positions (and potentially pay tax). To make your life a little easier, if you’re looking at the FOOD ETF, consider clicking here to access our comprehensive investment report. It’s free.
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