On the ASX, the InvestSMART Intelligent Investor Australian Equity Income Fund (Managed Fund) ETF (ASX: INIF) and SPDR S&P 500 Trust ETF (ASX: SPY) might be worth digging into in 2020.
What to know about the InvestSMART INIF ETF
The Intelligent Investor INIF Fund is an actively managed ETF, with a focus on a research-led, value investing approach. This fund also focuses on providing investors with exposure to companies with a sustainable income yield.
According to our most recent data, the INIF ETF had $24.72 million of money invested. Given its funds under management (also known as FUM or ‘market cap’) is less than $100 million, you should consider if this ETF is still too small and if it is sustainable for the ETF issuer. 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 general rule, especially if the ETF issuer/provider is reputable and committed to growing the ETF’s FUM through effective marketing strategies and distribution to financial advisers.
Fees to consider
According to our numbers, the annual management fee on the INIF ETF is 0.97%. The issuer, InvestSMART, collects this fee automatically.
Meaning, if you invested $2,000 in the INIF ETF for a full year you could expect to pay management fees of around $19.40. This fee is different from the fee you pay to your brokerage provider (e.g. CommSec, NabTrade, SelfWealth, etc.), which is the fee to buy or sell the ETF. In addition to a management fee charged by the issuer, be mindful to check the ‘spread‘ for the ETF.
A look at the fees in context
Fees aren’t the only key consideration for ETF investors, but it’s an easy thing to do. To understand if the ETF you’re looking at is too costly, compare it with other ETFs from the same sector, and against the industry average. For example, the average management fee (MER) across all of the ETFs covered by the Best ETFs Australia team was 0.51%, which is $10.20 per $2,000 invested. Keep in mind that small changes in the fees paid can make a big difference after 10 or 20 years. You should read the INIF Product Disclosure Statement (PDS), available on the ETF issuer’s website, because it will detail the fees, tax implications and the latest information.
Keep learning about the INIF ETF. Click here to access our free ETF review.
The SPDR SPY ETF – key points
The SPDR SPY ETF is the oldest ETF in the world and provides exposure to the 500 largest US-listed shares. These 500 shares represent approximately 80% of the total market capitalisation of the US stock market.
With our numbers for July 2020, SPY’s FUM stood at $39.97 million. Given it has less than $100 million invested, ask yourself (or your adviser) if the ETF is still too small (and if you should wait to buy into it). If you’re concerned the ETF might not be established enough, compare it alongside one of the other Index sector ETFs, using our full list of ETFs.
Are the fees for the SPY ETF bad?
SPDR, the ETF issuer, charges a yearly management fee of 0.09% for the SPY ETF. Meaning, if you invested $2,000 for a full 12-month period you could expect to pay a base management fee of around $1.80.
The management fee is above the average for all ETFs on our list of ASX ETFs, but keep in mind the ETF may be able to justify the higher price tag with superior performance over time.
Before rushing out and investing in the INIF fund, consider searching our full ETF list to compare the fees and costs of another ETF side-by-side. Another idea might be using our website to get a free but comprehensive investment review on INIF.
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