On the ASX, the BetaShares US Equities Strong Bear Currency Hedged (Hedge Fund) ETF (ASX: BBUS) and iShares Global 100 AUD Hedged ETF (ASX: IHOO) are two ASX ETFs worthy of closer inspection.
What the BetaShares BBUS does for investors
The BetaShares BBUS Fund is designed to provide protection from a declining US share market. When the S&P 500 Total Return Index falls, BBUS aims to generate magnified returns for investors.
As at the end of last month, the BBUS ETF had $266.6 million of money invested. Given BBUS’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 International shares sector because we believe that relative to smaller ETFs, achieving this amount of FUM derisks the ETF.
Fees & costs
The yearly management fee on the BBUS ETF is 1.38%. The issuer, BetaShares, takes this out automatically.
What this fee means is, if you invested, say, $2,000 in the BBUS ETF for a full year you could expect to pay management fees of around $27.60. 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 BBUS Product Disclosure Statement (PDS) because it has the complete and updated information on all fees.
Side note: did you know you can access our full review of the BBUS ETF by clicking here?
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Why does the iShares IHOO ETF do?
The iShares IHOO ETF provides investors with exposure to the largest 100 global companies. This is a low-cost way to access a variety of global companies through a single fund.
At the end of April 2020, IHOO’s FUM stood at $76.89 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 IHOO’s fees too high?
iShares charge a yearly management fee of 0.43% for the IHOO ETF. Meaning, with $2,000 invested for 12 months you can expect to pay a base management fee of around $8.60.
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.
If you want to learn more about the IHOO ETF, you should know that you can access our free investment report.
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