Would a shrewd ASX investor consider the Vanguard FTSE Emerging Markets Shares ETF (ASX: VGE) and VanEck Vectors MSCI Multifactor Emerging Markets Equity ETF (ASX: EMKT) right about now? These two ASX ETFs provide exposure to the International shares sector, and aim to make investing in it as convenient as possible.
The Vanguard VGE ETF (ASX:VGE)
The Vanguard VGE ETF provides investors with exposure to companies from a broad range of emerging markets, as well as exposure to currency fluctuations as the portfolio is unhedged.
According to our most recent data, the VGE ETF had $414.92 million of money invested. With VGE’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 International 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 VGE ETF is 0.48%. The issuer, Vanguard, collects this fee automatically.
Meaning, if you invested $2,000 in the VGE ETF for a full year you could expect to pay management fees of around $9.60. 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 VGE Product Disclosure Statement (PDS), available on the ETF issuer’s website, because it will detail the fees, tax implications and the latest information.
These are high level ideas or basics of the VGE ETF. To learn more about it, click through to access our free investment review.
The VanEck EMKT ETF (ASX:EMKT)
The VanEck EMKT ETF gives investors exposure to companies across a range of emerging markets. Emerging markets (EM) are markets which are typically associated with higher average returns over 10+ years, but they (typically) come with higher risk, as measured by volatility.
With our numbers for Oct 2020, EMKT’s FUM stood at $34.96 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 Multifactor sector ETFs, using our full list of ETFs.
Are the fees for the EMKT ETF bad?
VanEck, the ETF issuer, charges a yearly management fee of 0.69% for the EMKT ETF. Meaning, if you invested $2,000 for a full 12-month period you could expect to pay a base management fee of around $13.80.
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.
Before you read the Product Disclosure Statement (PDS) or speak to your financial adviser about the EMKT ETF report (both are very important), take a look at our free investment review.