The Vaneck MSCI Australian Sustainable Equity ETF (ASX: GRNV) and VanEck Vectors Australian Corporate Bond Plus ETF (ASX: PLUS) are two ASX ETFs that might be worth digging into in 2020.
Vaneck GRNV ETF
For a diversified portfolio of sustainable Australian companies, the VanEck GRNV ETF may be of interest. This ETF focuses on Australian companies that have high environmental, social and governance (ESG) performance, based on MSCI ESG Research. GRNV 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 GRNV ETF had $50.93 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 GRNV ETF is 0.35%. The issuer, Vaneck, takes this out automatically.
What this fee means is, if you invested, say, $2,000 in the GRNV 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 GRNV Product Disclosure Statement (PDS), available on the ETF issuer’s website, because it has the complete and up-to-date information.
To learn more about GRNV, click here to access our free investment report.
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The VanEck PLUS ETF – key points
The VanEck PLUS ETF provides investors with exposure to a portfolio of Australian dollar-denominated bonds from investment-grade companies.
At the end of May 2020, PLUS’s FUM stood at $228.9 million. With PLUS’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 PLUS’s fees too high?
VanEck charge a yearly management fee of 0.32% for the PLUS ETF. Meaning, with $2,000 invested for 12 months you can expect to pay a base management fee of around $6.40.
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’re weighing up the GRNV ETF in a diversified portfolio, consider searching our full ETF list to compare fees and costs side-by-side. Another thing you can do is access our comprehensive investment report on GRNV.
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