You might be sitting back and considering the BetaShares Global Quality Leaders ETF (ASX: QLTY) and thinking that January 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 BetaShares QLTY ETF provides investors with exposure to a diversified portfolio of 150 leading global companies. These companies are ranked and selected by examining companies based on the following factors; high return of equity and profitability, low leverage and earnings stability.
QLTY’s FUM does not meet our minimum hurdle
The BetaShares QLTY ETF had $87.72 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 BetaShares, 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
BetaShares charges investors a yearly management fee of 0.35% for the QLTY ETF. This means that if you invested $2,000 in QLTY for a full year, you could expect to pay management fees of around $7.00.
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 QLTY, bear in mind that this is just an introductory glance at the ETF. To explore further, check out our free BetaShares QLTY 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.