We think the Vanguard Global Multi-Factor Active ETF (Managed Fund) ETF (ASX: VGMF) and ETF Securities EURO STOXX 50 ETF (ASX: ESTX) ASX ETFs could be worthy of closer inspection. Here’s why…
1. The Vanguard VGMF ETF (ASX:VGMF) ETF
The Vanguard VGMF Fund is an actively-managed ETF providing investors with exposure to a portfolio of global companies selected using a rules-based, quantitative approach.
According to our most recent data, the VGMF ETF had $16.05 million of money invested. Given its funds under management (also known as FUM or ‘market cap’) is less than $100 million, you should consider if this ETF is still too small and if it is sustainable for the ETF issuer. 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 general rule, especially if the ETF issuer/provider is reputable and committed to growing the ETF’s FUM through effective marketing strategies and distribution to financial advisers.
Fees to consider
According to our numbers, the annual management fee on the VGMF ETF is 0.33%. The issuer, Vanguard, collects this fee automatically.
Meaning, if you invested $2,000 in the VGMF ETF for a full year you could expect to pay management fees of around $6.60. This fee is different from the fee you pay to your brokerage provider (e.g. CommSec, NabTrade, SelfWealth, etc.), which is the fee to buy or sell the ETF. In addition to a management fee charged by the issuer, be mindful to check the ‘spread‘ for the ETF.
A fee comparison
Fees aren’t the only key consideration for ETF investors, but it’s an easy thing to do. To understand if the ETF you’re looking at is too costly, compare it with other ETFs from the same sector, and against the industry average. For example, the average management fee (MER) across all of the ETFs covered by the Best ETFs Australia team was 0.51%, which is $10.20 per $2,000 invested. Keep in mind that small changes in the fees paid can make a big difference after 10 or 20 years. You should read the VGMF Product Disclosure Statement (PDS), available on the ETF issuer’s website, because it will detail the fees, tax implications and the latest information.
Want to hear more about the VGMF ETF? View our free investment review.
2. The ETF Securities ESTX ETF (ASX:ESTX) ETF
The ETFS ESTX ETF provides investors with exposure to 50 blue-chip companies from 12 eurozone countries; namely Austria, Belgium, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, the Netherlands, Portugal and Spain.
With our numbers for July 2020, ESTX’s FUM stood at $45.73 million. Given it has less than $100 million invested, ask yourself (or your adviser) if the ETF is still too small (and if you should wait to buy into it). If you’re concerned the ETF might not be established enough, compare it alongside one of the other Index sector ETFs, using our full list of ETFs.
Are the fees for the ESTX ETF bad?
ETF Securities, the ETF issuer, charges a yearly management fee of 0.35% for the ESTX ETF. Meaning, if you invested $2,000 for a full 12-month period you could expect to pay a base management fee of around $7.00.
This management fee is below the average for all ETFs on our Best ETFs Australia list of ETFs. However, you might still be able to find a cheaper ETF for less.
Want to know more? Get our team’s free ESTX ETF review. Simply click here now.
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