It's not too uncommon to see new exchange-traded funds (ETFs) debut on the ASX every few weeks or so these days. Such an event occurred just this week. Last week, in fact. Yes, the ASX has just welcomed the Global X MSCI International Small and Mid Cap ETF (ASX: ISMD).
ISMD units floated on the ASX back on Wednesday, 22 July. Since then, they have fared fairly well. The ETF first traded at just over $50.20 a unit. Today, they have climbed to about $50.63 at the time of writing.
But let's dive into exactly what you are buying if you purchase this latest ETF offering on the ASX.
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ISMD: An introduction to the new ETF kid on the ASX block
So, as its name implies, this latest ETF from Global X aims to offer ASX investors exposure to a portfolio of small-cap and mid-cap shares. No massive companies like Apple, Amazon or NVIDIA here. This is a relatively under-serviced opportunity for Australian investors, with only a handful of ETFs currently covering these corners of the global market.
As such, this ASX ETF may suit investors looking to diversify into international shares, but who also may be concerned about the heavy exposure that traditional index funds that track stocks outside the ASX have towards the largest companies in the world.
ISMD is an index fund, tracking the MSCI World ex Australia SMID Cap Select Index. This index holds around 300 international stocks, sourced from advanced economies around the world. As with most globally-focused index funds, ISMD is weighted heavily towards the United States, with about 65% of the ETF's portfolio made up of US stocks. Other contributors include Japan, the United Kingdom, Switzerland, and Italy. On the smaller end, Hong Kong, Singapore, Israel, and Bermuda also contribute to this fund.
In terms of individual holdings, you still might recognise some of this ASX ETF's largest stocks. They include SanDisk Corp, Warner Bros Discovery, eBay, Archer-Daniels-Midland, Ralph Lauren, and KFC-owner Yum! Brands.
The fund is not currency hedged. That means that the value of ISMD units can be affected by both the underlying movements of its stock holdings, and movements on the foreign exchange markets. This can cut both ways for investors, of course.
The Global X MSCI International Small and Mid Cap ETF charges a management fee of 0.45% per annum. That's a cost of $45 per year for every $10,000 invested.
