Like us, you’re probably looking at the Montgomery Global Equities Fund (Managed Fund) ETF (ASX: MOGL) and thinking now could be a good to consider taking a closer look.
1. What the MOGL does for investors
The Montgomery MOGL Fund is an actively-managed portfolio that invests in a concentrated portfolio of global equities. The fund typically selects between 15-30 global equities and aims to pay a distribution of at least 4.5% per year.
2. Funds Under Management (FUM)
The MOGL ETF had $80.5 million of money invested when we last pulled the monthly numbers. With a 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. We say an ETF with more than $100 million invested is typically more sustainable than one with less than $100 million (at least) because if an ETF is too small it may not be sustainable for an ETF issuer, such as Montgomery. 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.
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3. It’s all about the fees & costs
With a yearly management fee of 1.32% charged by Montgomery, if you invested $2,000 in the MOGL ETF for a full year you could expect to pay management fees of around $26.40. For context, the average management fee (MER) of all ETFs covered by Best ETFs Australia on our complete list of ASX ETFs is 0.5% or around $10.00 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 MOGL ETF, the most recent average monthly buy-sell spread we gathered (May 2020) was 0.77%. Remember, the lower (or ‘tighter’) the buy-sell spread, the better. This buy-sell spread was above the average ETF spread of 0.45%, which means the MOGL ETF has more slippage than the average ETF (that’s a bad thing).
These are just some of the considerations or factors you would need to look at when weighing up the MOGL ETF. Before doing anything, take a look at our Montgomery MOGL report – it’s free. While you’re at it, don’t forget to search our complete list of ASX ETFs.