We think the iShares MSCI South Korea Capped Index ETF (ASX: IKO) and Betashares Australian Small Companies Select Fund (Managed Fund) ETF (ASX: SMLL) ASX ETFs could be worthy of closer inspection. Here’s why…
1. The iShares IKO ETF (ASX:IKO) ETF
The iShares IKO ETF provides investors with exposure to the performance of the large and mid-cap segments of the Korean stock market.
According to our most recent data, the IKO ETF had $100.7 million of money invested. With IKO’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 IKO ETF is 0.63%. The issuer, iShares, collects this fee automatically.
Meaning, if you invested $2,000 in the IKO ETF for a full year you could expect to pay management fees of around $12.60. 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 IKO 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 IKO ETF? View our free investment review.
2. The Betashares SMLL ETF (ASX:SMLL) 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 July 2021, SMLL’s FUM stood at $63.79 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.
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 SMLL ETF review. Simply click here now.
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