Getting exposure to the Australian shares sector has never been easier thanks to ASX ETFs like the Vaneck S&P/ASX MidCap 50 ETF (ASX: MVE). However, no matter how easy it seems to be, we think it’s still important to do your own ETF review.
How to use the Vaneck S&P/ASX MidCap 50 ETF
The VanEck MVE ETF provides exposure to a diversified portfolio of large Australian companies and is the only ETF tracking the S&P/ASX Midcap 50 Index in Australia. The MVE ETF is designed to capture the performance of the top 50 Australian midcap companies based on market cap, ranking from 51 to 100.
MVE exceeds our minimum market cap (FUM) criteria
The MVE ETF had $114.53 million of money invested when we last pulled the monthly numbers. Given MVE’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 Australian shares sector because we believe that relative to smaller ETFs, achieving this amount of FUM derisks the ETF.
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3. MVE ETF fees & costs explained
With a yearly management fee of 0.45% charged by Vaneck, if you invested $2,000 in the MVE ETF for a full year you could expect to pay management fees of around $9.00. 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 MVE ETF, the most recent average monthly buy-sell spread we gathered (May 2020) was 0.28%. Remember, the lower (or ‘tighter’) the buy-sell spread, the better. This buy-sell spread was below the average ETF spread of 0.45%, so that’s a good thing.
Summary
Before ‘testing the water with both feet’ so to speak, be sure to read the MVE ETF’s Product Disclosure Statement (PDS), available on the Vaneck website, or speak to your financial adviser. Also, be sure to take a look at our Vaneck MVE report. While you’re on our website, use our complete list of ASX ETFs to search for a few different ETFs in the sector and conduct a side-by-side comparison using everything you’ve learned here.
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