1. The VanEck Vector MSCI Emerging Markets Multi-Factor Equity ETF (ASX:EMKT) ETF
The VanEck EMKT ETF gives investors exposure to companies in a variety of emerging markets. Emerging markets (EM) are markets that are generally associated with higher average returns over 10 years, but (generally) carry higher risk, as measured by volatility.
According to our most recent data, the EMKT ETF had $45.51 million of money invested. Since your funds under management (also known as FUM or ‘market cap’) are less than $100 million, you need to consider whether this ETF is still too small and sustainable for the ETF issuer. A Best ETFs we say an ETF with more than $100 million invested is usually 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 MUF through effective marketing strategies and distribution to financial advisors.
Rates to consider
According to our figures, the annual management fee for the EMKT ETF is 0.69%. The issuer, VanEck, collects this fee automatically.
That is, if you invested $2,000 in the EMKT ETF for a full year you could expect to pay administration fees of around $13.80. This fee is different from the fee you pay to your brokerage provider (eg CommSec, NabTrade, SelfWealth, etc.), which is the fee to buy or sell the ETF. In addition to a management fee charged by the issuer, note that you must check the “spread” of the ETF.
A price 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 expensive, compare it to other ETFs in the same sector and to the industry average. For example, the average management fee (MER) of all ETFs covered by the Australia’s best ETFs team was 0.51%, which is $10.20 for every $2,000 invested. Keep in mind that small changes in the rates paid can make a big difference after 10 or 20 years. You should read EMKT’s Product Disclosure Statement (PDS), available on the ETF issuer’s website, because it will detail fees, tax implications and the latest information.
Want to know more about the EMKT ETF? See our free investment review.
2. The iShares Global High Yield Bond (AUD Hedged) ETF (ASX:IHHY) ETF
The iShares IHHY ETF provides investors with exposure to the performance of high yield corporate bonds in global markets and sectors, hedged in Australian dollars. This is an easy way to gain exposure to high yield corporate bonds in global developed markets in one fund.
Using our July 2022 figures, IHHY’s FUM stood at $177.07 million. Given that IHHY’s MUF is over $100 million, our investment team would say that the ETF has met our minimum criteria for the total amount invested, also known as FUM. A highly sustainable ETF in the index sector should be able to scale well and become profitable for the ETF issuer.
A look at the IHHY ETF fee load?
iShares, the issuer of the ETF, charges an annual management fee of 0.56% for the IHHY ETF. That is, if you invest $2,000 for a full year from now you can expect to pay an administration fee of around $11.20.
The management fee is above average for all ETFs on our ASX ETF listbut keep in mind that the ETF may justify the higher price with superior performance over time.
You want to know more? Get the free IHHY ETF review from our team. Just click here now.