The Betashares Managed Risk Australian Share Fund (Managed Fund) ETF (ASX: AUST) and iShares J.P.Morgan USD Emerging Markets Bond (AUD Hedged) ETF (ASX: IHEB) are two ASX ETFs worth taking a look at.
What you need to know about the AUST ETF
The BetaShares AUST Fund is an actively managed fund that passively tracks the ASX 200, while providing investors with a risk managed approach that aims to minimise volatility and protect against losses in declining markets.
As at the end of last month, the AUST ETF had $44.08 million of money invested. Since its 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. At Best ETFs we say an ETF with more than $100 million invested is typically more sustainable than one with less than $100 million (at least). However, there are exceptions to this rule of thumb, especially if the ETF issuer/provider is committed to growing the ETF’s FUM to the point where it becomes profitable.
Fees & costs
The yearly management fee on the AUST ETF is 0.49%. The issuer, Betashares, takes this out automatically.
What this fee means is, if you invested, say, $2,000 in the AUST ETF for a full year you could expect to pay management fees of around $9.80. These fees would be automatically deducted from your investment. This does not include any performance fees, and it’s different from the fee you pay to your brokerage provider (e.g. CommSec, NabTrade, SelfWealth, etc.) to buy or sell the ETF. Importantly, you should also be mindful of the ‘spread‘ for the ETF.
Is the ETF too expensive?
The easiest way to know if the ETF is too costly is to compare it with other ETFs in the same sector, and against the industry average. The average management fee (MER) across all of the ETFs covered by Best ETFs Australia is 0.54%, which is around $10.80 per $2,000 invested. Keep in mind, small changes in fees can make a big difference after 10 or 20 years. What’s more, you should read the AUST Product Disclosure Statement (PDS) because it has the complete and updated information on all fees.
If you want to learn more about the AUST ETF, take a look at our ETF free investment report.
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The IHEB ETF
The iShares IHEB ETF provides investors with exposure to the performance of global emerging markets bonds that are US dollar-denominated, hedged back into Australian dollars.
At the end of April 2020, IHEB’s FUM stood at $29.5 million. With less than $100 million invested, it’s important to consider if this ETF is still too small and you should wait to buy in. If you’re worried about the size of the ETF, consider comparing it alongside some of the other Index sector ETFs, using our full list.
Are IHEB’s fees too high?
iShares charge a yearly management fee of 0.51% for the IHEB ETF. Meaning, with $2,000 invested for 12 months you can expect to pay a base management fee of around $10.20.
The management fee is above the average for all ETFs on our radar, but keep in mind the ETF may be able to justify it.
The iShares IHEB ETF is one for the watchlist, but if you want to access our full ETF review, simply click here to get our full report – it’s free.
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