We think it could be time to run the rule over iShares Core Global Corporate Bond (AUD Hedged) ETF (ASX: IHCB) and VanEck Vectors MSCI World Ex-Australia Quality ETF (ASX: QUAL), two ASX ETFs operate in the Fixed interest – International and International shares sectors, respectively.
The iShares IHCB ETF (ASX:IHCB)
The iShares IHCB ETF provides investors with access to the performance of investment-grade corporate bonds across global markets and sectors, hedged into Australian dollars. This is a relatively low-cost way to get exposure to global investment-grade corporate bonds in a single fund.
As at the end of last month, the IHCB ETF had $306.51 million of money invested. Given IHCB’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 Fixed interest – International 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 IHCB ETF is 0.26%. The issuer, iShares, takes this out automatically.
What this fee means is, if you invested, say, $2,000 in the IHCB ETF for a full year you could expect to pay management fees of around $5.20. 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 0.51%, which is around $10.20 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 IHCB Product Disclosure Statement (PDS), available on the ETF issuer’s website, because it has the complete and up-to-date information.
To learn more about the IHCB ETF, read our free ETF investment report once you’re done with this article.
VanEck QUAL ETF (ASX:QUAL)
The VanEck QUAL ETF gives investors exposure to large companies from developed countries around the world, excluding Australia.
At the end of July 2020, QUAL’s FUM stood at $1116.6 million. With QUAL’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 Quality factor sector should be able to scale well beyond that amount.
Are QUAL’s fees too high?
VanEck charge a yearly management fee of 0.4% for the QUAL ETF. Meaning, with $2,000 invested for 12 months you can expect to pay a base management fee of around $8.00.
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.
Did you know that you get access to our free investment report on ? View the free QUAL ETF report by clicking here.
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