We think the Magellan Global Equities Fund Currency Hedged (Managed Fund) ETF (ASX: MHG) and Vanguard Diversified Balanced Index ETF (ASX: VDBA) ASX ETFs could be worthy of closer inspection. Here’s why…
1. The Magellan MHG ETF (ASX:MHG) ETF
The Magellan MHG Fund is an actively-managed portfolio that invests in a select array of international companies. The fund typically selects between 20-40 global equities and hedges its exposure against the Australian dollar to manage currency risks.
According to our most recent data, the MHG ETF had $326.76 million of money invested. With MHG’s total funds under management (FUM) figure over $100 million, the ETF meets our team’s minimum investment criteria for FUM levels. As a general rule, our team draws the line at $100 million for ETFs in the International shares sector because we believe that, relative to smaller ETFs, achieving this amount of FUM lowers the chance that the ETF issuer will close the ETF.
Fees to consider
According to our numbers, the annual management fee on the MHG ETF is 1.35%. The issuer, Magellan, collects this fee automatically.
Meaning, if you invested $2,000 in the MHG ETF for a full year you could expect to pay management fees of around $27.00. 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 MHG 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 MHG ETF? View our free investment review.
2. The Vanguard VDBA ETF (ASX:VDBA) ETF
The Vanguard VDBA ETF provides investors with exposure to a portfolio of other Vanguard funds. This ETF gives investors exposure to multiple asset classes with a single purchase, and is designed to be a diversified portfolio in itself.
With our numbers for December 2020, VDBA’s FUM stood at $342.92 million. Since the VDBA’s FUM is over $100 million, our investing team would say the ETF has met our minimum criteria for the total amount invested, otherwise known as FUM. A very sustainable ETF in the Index sector should be able to scale well and become profitable for the ETF issuer.
Are the fees for the VDBA ETF bad?
Vanguard, the ETF issuer, charges a yearly management fee of 0.27% for the VDBA ETF. Meaning, if you invested $2,000 for a full 12-month period you could expect to pay a base management fee of around $5.40.
The management fee is above the average for all ETFs on our list of ASX ETFs, but keep in mind the ETF may be able to justify the higher price tag with superior performance over time.
Want to know more? Get our team’s free VDBA ETF review. Simply click here now.
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