2 Down-Under ETFs for investors in 2020 and beyond: VEFI & MVE

We think the Vaneck S&P/ASX MidCap 50 ETF (ASX: MVE) and Vanguard Ethically Conscious Global Aggregate Bond Index (Hedged) ETF (ASX: VEFI) ASX ETFs could be worthy of closer inspection. Here’s why…

1. The Vaneck MVE ETF (ASX:MVE) 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.

According to our most recent data, the MVE ETF had $119.9 million of money invested. With MVE’s total funds under management (FUM) figure over $100 million, the ETF meets our team’s minimum investment criteria for FUM levels. As a general rule, our team draws 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 lowers the chance that the ETF issuer will close the ETF.

Fees to consider

According to our numbers, the annual management fee on the MVE ETF is 0.45%. The issuer, Vaneck, collects this fee automatically.

Meaning, if you invested $2,000 in the MVE ETF for a full year you could expect to pay management fees of around $9.00. 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 MVE Product Disclosure Statement (PDS), available on the ETF issuer’s website, because it will detail the fees, tax implications and the latest information.

Want to hear more about the MVE ETF? View our free investment review.

2. The Vanguard VEFI ETF (ASX:VEFI) ETF

The Vanguard VEFI ETF provides investors with exposure to high-quality debt securities issued by governments, government-owned and government-guaranteed entities, and investment-grade corporate issuers from global markets. This ethical ETF excludes issuers with significant business activities in fossil fuels, alcohol, tobacco, gambling, weapons, nuclear power, and adult entertainment.

With our numbers for July 2020, VEFI’s FUM stood at $17.21 million. Given it has less than $100 million invested, ask yourself (or your adviser) if the ETF is still too small (and if you should wait to buy into it). If you’re concerned the ETF might not be established enough, compare it alongside one of the other Index sector ETFs, using our full list of ETFs.

Are the fees for the VEFI ETF bad?

Vanguard, the ETF issuer, charges a yearly management fee of 0.26% for the VEFI ETF. Meaning, if you invested $2,000 for a full 12-month period you could expect to pay a base management fee of around $5.20.

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.

Want to know more? Get our team’s free MVE ETF review. Simply click here now.

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