On the ASX, the Vanguard Global Minimum Volatility Active ETF (Managed Fund) ETF (ASX: VMIN) and Betashares Australian Ex-20 Portfolio Diversifier ETF (ASX: EX20) are two ASX ETFs worthy of closer inspection.
What the Vanguard VMIN ETF does for investors
The Vanguard VMIN Fund is an actively-managed ETF which aims to provide lower volatility than the broader global equity market by investing across many markets and industries.
According to our most recent data, the VMIN ETF had $11.8 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 VMIN ETF is 0.28%. The issuer, Vanguard, collects this fee automatically.
Meaning, if you invested $2,000 in the VMIN ETF for a full year you could expect to pay management fees of around $5.60. 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 0.5%, which is $10.00 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 VMIN 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 VMIN ETF by clicking here?
What does the Betashares EX20 ETF do?
The BetaShares EX20 ETF provides exposure to the largest 180 Australian shares, based on market capitalisation, excluding the top 20.
With our numbers for July 2020, EX20’s FUM stood at $117.04 million. Since the EX20’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 Index sector should be able to scale well and become profitable for the ETF issuer.
Are the fees for the EX20 ETF bad?
Betashares, the ETF issuer, charges a yearly management fee of 0.25% for the EX20 ETF. Meaning, if you invested $2,000 for a full 12-month period you could expect to pay a base management fee of around $5.00.
This management fee is below the average for all ETFs on our Best ETFs Australia list of ETFs. However, you might still be able to find a cheaper ETF for less.
If you want to learn more about the EX20 ETF, you should know that you can access our free investment report.