Is the SMLL ETF worth watching in January?

If you’re considering getting exposure to the Australian shares sector, the BetaShares Australian Small Companies Select Fund (Managed Fund) ETF (ASX: SMLL) might be one ASX ETF to watch in January.

How the SMLL ETF fits into an ASX portfolio

The BetaShares SMLL Fund is an ASX-listed managed fund that aims to outperform the S&P/ASX Small Ordinaries Accumulation Index and provide investors with regular capital growth and income.
The BetaShares SMLL Fund, aims to provide diversification through a portfolio of 50-100 companies that are typically between the 101-350 largest on the ASX by market capitalisation. This means investors are not being overexposed to the largest 100 companies that they may already hold through other ETFs or superannuation.

SMLL ETF is not yet at our $100m minimum FUM level

The BetaShares SMLL ETF had $70.92 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.

What about management fees and costs?

BetaShares charges investors a yearly management fee of 0.39% for the SMLL ETF. This means that if you invested $2,000 in SMLL for a full year, you could expect to pay management fees of around $7.80.

For context, the average management fee (MER) of all ETFs covered by Best ETFs Australia on our complete list of ASX ETFs is 0.51% or around $10.20 per $2,000 invested. Keep in mind, small changes in fees can make a big difference after 10 or 20 years.

Next steps

Before buying any ETF based on what you read here on Best ETFs, check out our BetaShares SMLL report – it’s completely free! Then, search our complete list of ASX ETFs to do a proper side-by-side comparison of your chosen sector or thematic.

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Low fees? Check.

Long-term growth potential? Check.

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