Would a shrewd ASX investor consider the ETF Securities SelfWealth SMSF Leaders ETF (ASX: SELF) and VanEck Video Gaming and eSports ETF (ASX: ESPO) right about now? These two ASX ETFs invest in the Australian shares and International shares sectors, respectively.
The ETF Securities SELF ETF (ASX:SELF)
The SelfWealth SELF ETF is an actively managed portfolio of Australian companies, which tracks an index that is made up of top performing SelfWealth member SMSF portfolios.
According to our most recent data, the SELF ETF had $97.96 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 SELF ETF is 0.88%. The issuer, ETF Securities, collects this fee automatically.
Meaning, if you invested $2,000 in the SELF ETF for a full year you could expect to pay management fees of around $17.60. 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 SELF 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 SELF ETF. To learn more about it, click through to access our free investment review.
The VanEck Video Gaming and eSports ETF (ASX: ESPO)
The ESPO ETF invests in the world’s largest companies involved in global video game development, eSports, related hardware, and software by aiming to track the performance of the MVIS Global Video Gaming and eSports Index.
With our numbers for Dec 2020, ESPO’s FUM stood at $57.51 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 Growth factor sector ETFs, using our full list of ETFs.
Are the fees for the ESPO ETF bad?
VanEck, the ETF issuer, charges a yearly management fee of 0.55% for the ESPO ETF. Meaning, if you invested $2,000 for a full 12-month period you could expect to pay a base management fee of around $11.00.
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 ESPO ETF report (both are very important), take a look at our free investment review.