If you’re on the hunt for exposure to the Australian shares sector, it could be worth adding the K2 Asset Management Australian Small Cap Fund (Hedge Fund) ETF (ASX: KSM) to your ASX watchlist. Let’s take a closer look at this K2 Asset Management ETF.
What is the KSM ETF used for?
The K2 KSM Fund is an actively managed small companies fund listed on the ASX. The fund seeks to provide investors with absolute returns, rather than tracking a benchmark.
Keep an eye on FUM
The K2 Asset Management KSM ETF had $10.5 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 K2 Asset Management, 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.
Fees and costs for investors
K2 Asset Management charges investors a yearly management fee of 2.39% for the KSM ETF. This means that if you invested $2,000 in KSM for a full year, you could expect to pay management fees of around $47.80.
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.
These are just some of the considerations or factors you would need to look at when weighing up the KSM ETF. Before doing anything, take a look at our K2 Asset Management KSM report – it’s free. While you’re at it, don’t forget to search our complete list of ASX ETFs.