The ASX ETF market seems to be growing faster by the day, and one of the ETFs that you might be considering is the VanEck Vectors Morningstar Wide Moat ETF (ASX: MOAT). In this article, we’ll provide a brief review of the MOAT ETF.
1. Simple exposure
The VanEck MOAT ETF provides investors with exposure to a portfolio of carefully selected US companies which fit the criteria of having a sustainable competitive advantage, sometimes called a ‘moat’.
2. Funds Under Management (FUM)
Given MOAT’s total funds under management (FUM) figure is over $100 million, the ETF has met our minimum criteria for the total amount of money invested, otherwise known as FUM. We draw 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 derisks the ETF.
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3. Fees & costs matter
With a yearly management fee of 0.49% charged by VanEck, if you invested $2,000 in the MOAT ETF for a full year you could expect to pay management fees of around $9.80. This does not include any performance fees earned by the ETF’s manager for doing a good job. For context, the average management fee (MER) of all ETFs covered by Best ETFs Australia on our complete list of ASX ETFs is 0.54% or around $10.80 per $2,000 invested. Keep in mind, small changes in fees can make a big difference after 10 or 20 years.
In addition to a yearly management fee, there are other costs investors must consider, including brokerage and taxes. A specific cost for ETF and mFund investors to consider is the buy-sell spread, which is the slippage or ‘invisible’ cost paid by an investor when he or she buys or sells the ETF. For the MOAT ETF, the most recent average monthly buy-sell spread we gathered (April 2020) was 0.27%. Remember, the lower (or ‘tighter’) the buy-sell spread, the better. This buy-sell spread was below the average ETF spread of 0.51%, so that’s a good thing.
These are just some of the considerations or factors you would need to look at when weighing up the MOAT ETF. Before doing anything, take a look at our VanEck MOAT report – it’s free. While you’re at it, don’t forget to search our complete list of ASX ETFs.