You might be sitting back and considering the VanEck Vectors MSCI International Sustainable Equity ETF (ASX: ESGI) and thinking that November could be as good of a time as any to take closer look. Here’s how we would start our research.
Find out what the ETF does
The VanEck ESGI ETF provides exposure to sustainable international companies not including Australian or fossil fuel stocks.
ESGI’s FUM does not meet our minimum hurdle
The VanEck ESGI ETF had $45.28 million of money invested when we last pulled the monthly numbers. With a funds under management (FUM) or ‘market cap’ figure of less than $100 million, it’s important to consider if this ETF is still too small.
We say an ETF with more than $100 million invested is typically more sustainable than one with less than $100 million (at least). This is because if an ETF is too small, it may not be sustainable for an ETF issuer/provider, such as VanEck, to continue to operate it.
That said, there are exceptions to this rule of thumb, especially if the ETF issuer is committed to growing the ETF’s FUM to the point where it becomes profitable.
Pay attention to yearly costs & fees
VanEck charges investors a yearly management fee of 0.55% for the ESGI ETF. This means that if you invested $2,000 in ESGI for a full year, you could expect to pay management fees of around $11.00.
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.
If you’re thinking about investing in ESGI, bear in mind that this is just an introductory glance at the ETF. To explore further, check out our free VanEck ESGI report. And for good measure, search our complete list of ASX ETFs for similar ETFs in the International shares sector to do a good comparison.
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