Getting exposure to the Multi-Asset sector has never been easier thanks to ASX ETFs like the Schroder Investment Management Australia Limited Real Return Fund (Managed Fund) ETF (ASX: GROW). However, no matter how easy it seems to be, we think it’s still important to do your own ETF review.
How to use the Schroder Investment Management Australia Limited Real Return Fund (Managed Fund) ETF
The Schroder GROW Fund is a multi-asset class, actively-managed portfolio of global assets. The fund aims to deliver a return of 5% per annum above inflation (before fees), over a rolling 3-year period.
The GROW ETF is yet to reach our FUM target
As at the end of last month, the GROW ETF had $39.12 million of money invested. 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) because if an ETF is too small it may not be sustainable for an ETF issuer, such as Schroder Investment Management Australia Limited. 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.
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3. GROW ETF fees & costs explained
With a yearly management fee of 0.9% charged by Schroder Investment Management Australia Limited, if you invested $2,000 in the GROW ETF for a full year you could expect to pay management fees of around $18.00. 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 GROW ETF, the most recent average monthly buy-sell spread we gathered (April 2020) was 0.63%. 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 GROW ETF has more slippage than the average ETF (that’s a bad thing).
Summary
Before ‘testing the water with both feet’ so to speak, be sure to read the GROW ETF’s Product Disclosure Statement (PDS), available on the Schroder Investment Management Australia Limited website, or speak to your financial adviser. Also, be sure to take a look at our Schroder Investment Management Australia Limited GROW report. While you’re on our website, use our complete list of ASX ETFs to search for a few different ETFs in the sector and conduct a side-by-side comparison using everything you’ve learned here.
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