Australian ETFs on watch: Montgomery MOGL & Vanguard VDBA

On the ASX, the Montgomery Global Equities Fund (Managed Fund) ETF (ASX: MOGL) and Vanguard Diversified Balanced Index ETF (ASX: VDBA) are two ASX ETFs worthy of closer inspection.

What the Montgomery MOGL ETF 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.

According to our most recent data, the MOGL ETF had $80.5 million of money invested. Given its funds under management (also known as FUM or ‘market cap’) is less than $100 million, you should consider if this ETF is still too small and if it is sustainable for the ETF issuer. 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 general rule, especially if the ETF issuer/provider is reputable and committed to growing the ETF’s FUM through effective marketing strategies and distribution to financial advisers.

Fees to consider

According to our numbers, the annual management fee on the MOGL ETF is 1.32%. The issuer, Montgomery, collects this fee automatically.

Meaning, if you invested $2,000 in the MOGL ETF for a full year you could expect to pay management fees of around $26.40. This fee is different from the fee you pay to your brokerage provider (e.g. CommSec, NabTrade, SelfWealth, etc.), which is the fee to buy or sell the ETF. In addition to a management fee charged by the issuer, be mindful to check the ‘spread‘ for the ETF.

A fee comparison

Fees aren’t the only key consideration for ETF investors, but it’s an easy thing to do. To understand if the ETF you’re looking at is too costly, compare it with other ETFs from the same sector, and against the industry average. For example, the average management fee (MER) across all of the ETFs covered by the Best ETFs Australia team was 0.51%, which is $10.20 per $2,000 invested. Keep in mind that small changes in the fees paid can make a big difference after 10 or 20 years. You should read the MOGL Product Disclosure Statement (PDS), available on the ETF issuer’s website, because it will detail the fees, tax implications and the latest information.

Side note: did you know you can access our full review of the MOGL ETF by clicking here?

What does the Vanguard VDBA ETF do?

The Vanguard VDBA ETF provides investors with exposure to a portfolio of other Vanguard funds. This ETF gives investors exposure to multiple asset classes with a single purchase, and is designed to be a diversified portfolio in itself.

With our numbers for July 2020, VDBA’s FUM stood at $265.02 million. Since the VDBA’s FUM is over $100 million, our investing team would say the ETF has met our minimum criteria for the total amount invested, otherwise known as FUM. A very sustainable ETF in the Diversified sector should be able to scale well and become profitable for the ETF issuer.

Are the fees for the VDBA ETF bad?

Vanguard, the ETF issuer, charges a yearly management fee of 0.27% for the VDBA ETF. Meaning, if you invested $2,000 for a full 12-month period you could expect to pay a base management fee of around $5.40.

The management fee is above the average for all ETFs on our list of ASX ETFs, but keep in mind the ETF may be able to justify the higher price tag with superior performance over time.

If you want to learn more about the VDBA ETF, you should know that you can access our free investment report.

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Disclaimer: Any information contained in this article is limited to general financial advice/information only. The information should not be relied upon because it has not taken into account your specific needs, goals or objectives. Please, consult a licenced and trusted financial adviser before acting on the information. Past performance is no guarantee of future performance. Nothing in this article should be considered a guarantee. Investing is risky and can result in capital loss. By reading this website, you acknowledge this warning and agree to our terms & conditions available here. This article is authorised by Owen Raszkiewicz of The Rask Group Pty Ltd.


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