The VanEck Vectors ChinaAMC A-Share ETF (ASX: CETF) and iShares S&P Small-Cap ETF (ASX: IJR) are two ASX ETFs that might be worth digging into in 2020.
VanEck CETF ETF
The VanEck CETF ETF gives investors exposure to 50 of the largest companies in the mainland Chinese market.
As at the end of last month, the CETF ETF had $23.53 million of money invested. Since its funds under management (FUM) or ‘market cap’ figure of less than $100 million, it’s important to consider if this ETF is still too small. 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 rule of thumb, especially if the ETF issuer/provider is committed to growing the ETF’s FUM to the point where it becomes profitable.
Fees & costs
The yearly management fee on the CETF ETF is 0.72%. The issuer, VanEck, takes this out automatically.
What this fee means is, if you invested, say, $2,000 in the CETF ETF for a full year you could expect to pay management fees of around $14.40. These fees would be automatically deducted from your investment. This does not include any performance fees, and it’s different from the fee you pay to your brokerage provider (e.g. CommSec, NabTrade, SelfWealth, etc.) to buy or sell the ETF. Importantly, you should also be mindful of the ‘spread‘ for the ETF.
Is the ETF too expensive?
The easiest way to know if the ETF is too costly is to compare it with other ETFs in the same sector, and against the industry average. The average management fee (MER) across all of the ETFs covered by Best ETFs Australia is 0.54%, which is around $10.80 per $2,000 invested. Keep in mind, small changes in fees can make a big difference after 10 or 20 years. What’s more, you should read the CETF Product Disclosure Statement (PDS) because it has the complete and updated information on all fees.
To learn more about CETF, click here to access our free investment report.
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The iShares IJR ETF – key points
The iShares IJR ETF provides investors with exposure to small-cap US companies. This is a low-cost way to access a specific segment of the US market through a single fund.
At the end of April 2020, IJR’s FUM stood at $166.29 million. With IJR’s FUM over $100 million, we say the ETF has met our minimum criteria for the total amount invested. However, in reality, a very sustainable ETF in the Index sector should be able to scale well beyond that amount.
Are IJR’s fees too high?
iShares charge a yearly management fee of 0.07% for the IJR ETF. Meaning, with $2,000 invested for 12 months you can expect to pay a base management fee of around $1.40.
The management fee is above the average for all ETFs on our radar, but keep in mind the ETF may be able to justify it.
If you’re weighing up the CETF ETF in a diversified portfolio, consider searching our full ETF list to compare fees and costs side-by-side. Another thing you can do is access our comprehensive investment report on CETF.
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