In this article, we’ll try to explain why the BetaShares S&P/ASX 200 Financials Sector ETF (ASX: QFN) and Vanguard Australian Government Bond Index ETF (ASX: VGB) are two ASX ETFs worth taking a look at in FY21.
Some things you should know about the QFN ETF
The BetaShares QFN ETF is a more unique ETF that invests in financial companies from within the ASX 200, while excluding A-REITs. This ETF has a substantial exposure to the ‘Big 4’ Australian banks.
According to our most recent data, the QFN ETF had $62.4 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.
Like the look of the QFN ETF? Grab our ETF free investment report.
The VGB ETF – a quick look for savvy investors
The Vanguard VGB ETF provides investors with exposure to a portfolio of Australian Commonwealth Government bonds, state government bonds and bonds from treasury corporations.
With our numbers for December 2021, VGB’s FUM stood at $539.72 million. Since the VGB’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 VGB ETF bad?
Vanguard, the ETF issuer, charges a yearly management fee of 0.20% for the VGB ETF. Meaning, if you invested $2,000 for a full 12-month period you could expect to pay a base management fee of around $4.00.
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.
The Vanguard VGB ETF might be one idea for the watchlist but before you go any further, click here to get our full ETF review – it’s free.
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