On the ASX, the ETF Securities Physical Gold ETF (ASX: GOLD) and Platinum Funds Management Asia Fund (Quoted Managed Hedge Fund) ETF (ASX: PAXX) are two ASX ETFs that could be worthy of closer inspection.
1. ETF Securities GOLD ETF (ASX:GOLD) – what you need to know
The ETFS GOLD ETF provides investors with access to the precious metal of gold, by seeking to achieve a return equivalent to the movements in the gold spot price, before fees and expenses.
As at the end of last month, the GOLD ETF had $1725.78 million of money invested. Given GOLD’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.
Fees & costs
The yearly management fee on the GOLD ETF is 0.4%. The issuer, ETF Securities, takes this out automatically.
What this fee means is, if you invested, say, $2,000 in the GOLD ETF for a full year you could expect to pay management fees of around $8.00. This fee is 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 0.5%, which is around $10.00 per $2,000 invested. Small changes in fees can make a big difference after 10 or 20 years. To understand all of the fees, you should read the GOLD Product Disclosure Statement (PDS), available on the ETF issuer’s website, because it has the complete and up-to-date information.
If you like the sound of the GOLD ETF, view our free investment report.
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2. The basics of the Platinum Funds Management PAXX ETF (ASX:PAXX)
The Platinum PAXX Fund is an actively-managed fund that invests in a diversified portfolio of Asian companies, excluding Japan. The fund typically selects between 50-100 Asian companies that the investment team at Platinum believe to be undervalued by the market.
At the end of May 2020, PAXX’s FUM stood at $135.99 million. With PAXX’s FUM over $100 million, we say the ETF has met our minimum criteria for the total amount invested. However, in reality, a very sustainable ETF in the Active ETF (e.g. ETMF) sector should be able to scale well beyond that amount.
Are PAXX’s fees too high?
Platinum Funds Management charge a yearly management fee of 1.1% for the PAXX ETF. Meaning, with $2,000 invested for 12 months you can expect to pay a base management fee of around $22.00.
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.
To get our full GOLD ETF review, click here now.
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