Like us, you’re probably looking at the ETF Securities Physical Silver ETF (ASX: ETPMAG) and thinking now could be a good to consider taking a closer look.
How the ETPMAG ETF could be used in portfolios
The ETFS ETPMAG ETF provides investors with access to the precious metal of silver, by seeking to achieve a return equivalent to the movements in the silver spot price, before fees and expenses.
ETPMAG’s market capitalisation (total amount invested) does not meet our hurdle
As at the end of last month, the ETPMAG ETF had $105.85 million of money invested. Given ETPMAG’s total funds under management (FUM) figure is over $100 million, the ETF has met our minimum criteria for the total amount of money invested, otherwise known as FUM. We draw the line at $100 million for ETFs in the Commodities sector because we believe that relative to smaller ETFs, achieving this amount of FUM derisks the ETF.
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ETPMAG costs and yearly fees
With a yearly management fee of 0.49% charged by ETF Securities, if you invested $2,000 in the ETPMAG ETF for a full year you could expect to pay management fees of around $9.80. This does not include any performance fees earned by the ETF’s manager for doing a good job. For context, the average management fee (MER) of all ETFs covered by Best ETFs Australia on our complete list of ASX ETFs is 0.54% or around $10.80 per $2,000 invested. Keep in mind, small changes in fees can make a big difference after 10 or 20 years.
In addition to a yearly management fee, there are other costs investors must consider, including brokerage and taxes. A specific cost for ETF and mFund investors to consider is the buy-sell spread, which is the slippage or ‘invisible’ cost paid by an investor when he or she buys or sells the ETF. For the ETPMAG ETF, the most recent average monthly buy-sell spread we gathered (April 2020) was 0.56%. Remember, the lower (or ‘tighter’) the buy-sell spread, the better. This buy-sell spread was above the average ETF spread of 0.51%, which means the ETPMAG ETF has more slippage than the average ETF (that’s a bad thing).
What next
If you’re weighing up the ETPMAG ETF, keep in mind that this is just a brief introduction to the ETF. Indeed, before doing anything, take a look at our free ETF Securities ETPMAG report. And while you’re at it, consider searching our complete list of ASX ETFs for similar ETFs in the Commodities sector, to do a good comparison.
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