Could now be your opportunity to place the Perennial Value/eInvest Future Impact Small Caps Fund (Managed Fund) ETF (ASX: IMPQ) and the Betashares Australian Small Companies Select Fund (Managed Fund) ETF (ASX: SMLL) on your ASX investing watchlist?
Why do investors own the Perennial Value/eInvest Future Impact Small Caps Fund (Managed Fund) ETF?
The eInvest IMPQ Fund provides actively-managed exposure to Australian and New Zealand-listed small caps. IMPQ also focuses on investing in companies with positive environmental, social and governance (ESG) outcomes.
According to our most recent data, the IMPQ ETF had $2.43 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 IMPQ ETF is 0.99%. The issuer, Perennial Value/eInvest, collects this fee automatically.
Meaning, if you invested $2,000 in the IMPQ ETF for a full year you could expect to pay management fees of around $19.80. 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 0.5%, which is $10.00 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 IMPQ Product Disclosure Statement (PDS), available on the ETF issuer’s website, because it will detail the fees, tax implications and the latest information.
Don’t stop here, to get our full IMPQ ETF review, click through to this ETF review page now.
Betashares Australian Small Companies Select Fund (Managed Fund) ETF
The BetaShares SMLL Fund is an ASX-listed managed fund that aims to outperform the S&P/ASX Small Ordinaries Accumulation Index and provide investors with regular capital growth and income.
With our numbers for Oct 2020, SMLL’s FUM stood at $40.43 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 Active ETF (e.g. ETMF) sector ETFs, using our full list of ETFs.
Are the fees for the SMLL ETF bad?
Betashares, the ETF issuer, charges a yearly management fee of 0.39% for the SMLL ETF. Meaning, if you invested $2,000 for a full 12-month period you could expect to pay a base management fee of around $7.80.
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.
To discover more facts about the SMLL ETF, read our free ETF investment report.
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