What is the BEAR ETF used for?
The BetaShares BEAR Fund is designed to provide inverse or opposite exposure to the largest Australian shares, based on market capitalisation. When the S&P/ASX 200 Accumulation Index falls, BEAR aims to generate positive returns for investors.
The BetaShares BEAR Fund could be used by experienced investors to hedge their portfolio against market declines, effectively betting against the Australian stock market. This is a high risk strategy as gains and losses are magnified, compared to a simple ETF tracking the ASX 200 Index. BEAR is a highly volatile Fund, and there is no guarantee the ETF will provide effective or perfect protection in a falling market.
Keep an eye on FUM
The BetaShares BEAR ETF had $59.48 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.
Fees and costs for investors
BetaShares charges investors a yearly management fee of 1.48% for the BEAR ETF. This means that if you invested $2,000 in BEAR for a full year, you could expect to pay management fees of around $29.60.
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.
Summary
These are just some of the considerations or factors you would need to look at when weighing up the BEAR ETF. Before doing anything, take a look at our BetaShares BEAR report – it’s free. While you’re at it, don’t forget to search our complete list of ASX ETFs.
