In this article, we’ll try to explain why the Vanguard Australian Shares High Yield ETF (ASX: VHY) and VanEck Vectors MSCI Multifactor Emerging Markets Equity ETF (ASX: EMKT) are two ASX ETFs worth taking a look at in FY21.
Some things you should know about the VHY ETF
The Vanguard VHY ETF provides exposure to the largest dividend-paying Australian shares, based on market capitalisation and forecast dividend yield. It tracks the FTSE Australian High Dividend Yield Index. The index excludes real estate investment trusts (REITs) and caps the total exposure to any sector/industry at 40%.
According to our most recent data, the VHY ETF had $1897.71 million of money invested. With VHY’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 Australian 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.
Like the look of the VHY ETF? Grab our ETF free investment report.
The EMKT ETF – a quick look for savvy investors
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 July 2021, EMKT’s FUM stood at $61.53 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.
The VanEck EMKT ETF might be one idea for the watchlist but before you go any further, click here to get our full ETF review – it’s free.
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