Why would an investor want the own the VanEck Vectors MSCI Multifactor Emerging Markets Equity ETF?
The VanEck EMKT ETF gives investors exposure to companies across a range of emerging markets. Emerging markets (EM) are markets which are typically associated with higher average returns over 10+ years, but they (typically) come with higher risk, as measured by volatility.
As at the end of last month, the EMKT ETF had $29.68 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 EMKT ETF is 0.69%. The issuer, VanEck, takes this out automatically.
What this fee means is, if you invested, say, $2,000 in the EMKT ETF for a full year you could expect to pay management fees of around $13.80. This fee is 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. Small changes in fees can make a big difference after 10 or 20 years. To understand all of the fees, you should read the EMKT Product Disclosure Statement (PDS), available on the ETF issuer’s website, because it has the complete and up-to-date information.
Don’t stop there, to get our full EMKT ETF review, click here now.
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iShares S&P Global Healthcare ETF
The iShares IXJ ETF provides investors with a targeted exposure to over 100 global healthcare companies. This includes companies in the pharmaceutical, biotechnology, and medical device space.
At the end of April 2020, IXJ’s FUM stood at $723.6 million. With IXJ’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 IXJ’s fees too high?
iShares charge a yearly management fee of 0.47% for the IXJ ETF. Meaning, with $2,000 invested for 12 months you can expect to pay a base management fee of around $9.40.
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.
To keep discovering what makes the EMKT ETF ‘tick’, so to speak, have a read our free ETF investment report.