The Australian ETF industry seems to be growing faster by the day, and one of the ETFs you might have your eye is the SPDR S&P/ASX Australian Bond Fund ETF (ASX: BOND). In this article, we’ll provide a quick review of the BOND ETF.
1. Exposure
The name’s… the SPDR BOND ETF. BOND invests in Australian bonds which are investment grade and denominated in Australian dollars with maturities more than one year.
2. Funds under management (FUM)
The SPDR BOND ETF had $49.25 million of money invested when we last pulled the monthly numbers. 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). This is because if an ETF is too small, it may not be sustainable for an ETF issuer/provider, such as SPDR, to continue to operate it.
That said, there are exceptions to this rule of thumb, especially if the ETF issuer is committed to growing the ETF’s FUM to the point where it becomes profitable.
3. Management fees & costs matter
SPDR charges investors a yearly management fee of 0.24% for the BOND ETF. This means that if you invested $2,000 in BOND for a full year, you could expect to pay management fees of around $4.80.
For context, the average management fee (MER) of all ETFs covered by Best ETFs Australia on our complete list of ASX ETFs is 0.5% or around $10.00 per $2,000 invested. Keep in mind, small changes in fees can make a big difference after 10 or 20 years.
What now?
These are just some of the considerations or factors you would need to consider when weighing up the BOND ETF. If you’re looking to do some further digging, be sure to read our SPDR BOND report – it’s free. While you’re at it, don’t forget to search our complete list of ASX ETFs. You can filter the results according to sector, issuer, size, and more.
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