Don’t you wonder if now is the time to start analysing the Morningstar International Shares Active ETF (Managed Fund) ETF (ASX: MSTR) and Vanguard Diversified Conservative Index ETF (ASX: VDCO)? These Exchange-Traded Funds (ETFs) aim to provide exposure to the International shares and Diversified ETF sectors, respectively.
Is the MSTR ETF a good investment? Here’s where you start…
The Morningstar MSTR Fund is an actively-managed fund that invests in a select portfolio of international companies for long-term capital growth. The fund hedges its exposure against the Australian dollar to manage currency risks.
Based upon our most recent data, the MSTR ETF had $10.59 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.
Get the Best ETF Australia team’s MSTR ETF review, available free when you click this link: access the free investment report.
A quick take of the VDCO ETF
The Vanguard VDCO ETF provides investors with exposure to a portfolio of other Vanguard funds/ETFs. Meaning, it’s an ETF which invests only in other funds/ETFs — in this case, it only invests in funds managed by its own provider, Vanguard 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, VDCO’s FUM stood at $114.77 million. Since the VDCO’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 VDCO ETF bad?
Vanguard, the ETF issuer, charges a yearly management fee of 0.27% for the VDCO 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 VDCO management fee is above the average for all ETFs on our list of ASX ETFs, but keep in mind this is a diversified ETF and may be able to justify the higher price tag with superior performance, ease of use — or lower fees over time.
Did you know: you can get our full ETF review of VDCO by clicking here?