What you need to know about the VanEck Vectors China New Economy ETF (ASX:CNEW) and BetaShares Active Australian Hybrids Fund (Managed Fund) ETF (ASX:HBRD)

The VanEck Vectors China New Economy ETF (ASX: CNEW) and BetaShares Active Australian Hybrids Fund (Managed Fund) ETF (ASX: HBRD) are Exchange-Traded Funds (ETFs) operating in the International shares and Fixed interest – Australia sectors, respectively.

How would an investor add CNEW to a portfolio?

The VanEck CNEW ETF provides investors with exposure to Chinese companies primarily from the IT, health care, consumer staples and consumer discretionary sectors.

According to our most recent data, the CNEW ETF had $114.84 million of money invested. With CNEW’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 CNEW ETF is .95%. The issuer, VanEck, collects this fee automatically.

Meaning, if you invested $2,000 in the CNEW ETF for a full year you could expect to pay management fees of around $19.00. 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 CNEW Product Disclosure Statement (PDS), available on the ETF issuer’s website, because it will detail the fees, tax implications and the latest information.

The CNEW ETF could be one to add to your watchlist. If you want to access our full ETF review, click here to get our full report – it’s totally free.

Getting to know the HBRD ETF

The BetaShares HBRD Fund provides investors with exposure to hybrids. Think of hybrids this way: companies can raise capital by either issuing debt or equity. Debt and equity each have different characteristics, advantages and disadvantages. Hybrid securities have some characteristics of both.

With our numbers for July 2022, HBRD’s FUM stood at $1841.79 million. Since the HBRD’s FUM is over $100 million, our investing team would say the ETF has met our minimum criteria for the total amount invested, otherwise known as FUM. A very sustainable ETF in the Index sector should be able to scale well and become profitable for the ETF issuer.

A look at the HBRD ETF fee load?

BetaShares, the ETF issuer, charges a yearly management fee of 0.55% for the HBRD ETF. Meaning, if you invest $2,000 for a full year from now you can expect to pay a 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.

Picking over ETFs seems too easy to be true: ‘just pick one and put it in your bottom-drawer’. However, it’s important to get it right the first time so that you won’t end up having to chop-and-change positions (and potentially pay extra tax). To make your life a little easier, if you’re looking at the HBRD ETF, make sure you click here to access our analyst’s investment report. It’s free.

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