If you’re considering getting exposure to the International shares sector, the ETF Securities FANG+ ETF (ASX: FANG) might be one ASX ETF to watch in May.
What does the ETF Securities FANG actually do?
The ETF Securities FANG ETF provides investors with exposure to the performance of the 10 most highly-traded ‘next-generation’ technology and tech-enabled companies listed on US stock markets.
FANG adopts an equal weight strategy, meaning that it weights the shares within the portfolio equally – this differs from the more commonly used method of weighting by market capitalisation.
Growing funds under management
As at the end of last month, the FANG ETF had $14.72 million of money invested. With a funds under management (FUM) or ‘market cap’ figure of less than $100 million, it’s important to consider if this ETF is yet to reach scale.
We say an ETF with more than $100 million invested is typically more sustainable than one with less than $100 million because if an ETF is too small it may not be sustainable for an ETF issuer, such as ETF Securities. However, there are exceptions to this rule of thumb, especially when an ETF provider like ETF Securities is committed to growing the ETF’s FUM to the point where it becomes profitable.
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Don’t forget the fees (and other costs)
With a yearly management fee of 0.35% charged by ETF Securities, if you invested $2,000 in the FANG ETF for a full year you could expect to pay management fees of around $7.
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 FANG ETF, the most recent average monthly buy-sell spread we gathered (April 2020) was 0.39%. 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.
Next steps
For us, FANG one is one ETF worth adding to a watchlist. Before buying any ETF based on what you read here, feel free to read our free ETF Securities FANG report. Then, search our complete list of ASX ETFs to do a proper side-by-side comparison of your chosen sector.
The FANG ETF is a relatively low cost, it’s exciting and new ETF, but it’s also important to consider all of your options.
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