On the ASX, the iShares Government Inflation ETF (ASX: ILB) and SPDR S&P/ASX 50 ETF (ASX: SFY) are two ASX ETFs worthy of closer inspection.
What the iShares ILB ETF does for investors
The iShares ILB ETF provides investors with exposure to the performance of a segment of the Australian bond market comprised of inflation-linked fixed income securities.
According to our most recent data, the ILB ETF had $160.09 million of money invested. With ILB’s total funds under management (FUM) figure over $100 million, the ETF meets our team’s minimum investment criteria for FUM levels. As a general rule, our team draws the line at $100 million for ETFs in the Fixed interest – Australia sector because we believe that, relative to smaller ETFs, achieving this amount of FUM lowers the chance that the ETF issuer will close the ETF.
Fees to consider
According to our numbers, the annual management fee on the ILB ETF is 0.18%. The issuer, iShares, collects this fee automatically.
Meaning, if you invested $2,000 in the ILB ETF for a full year you could expect to pay management fees of around $3.60. 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 fee comparison
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 0.5%, which is $10.00 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 ILB Product Disclosure Statement (PDS), available on the ETF issuer’s website, because it will detail the fees, tax implications and the latest information.
Side note: did you know you can access our full review of the ILB ETF by clicking here?
What does the SPDR SFY ETF do?
The SPDR SFY ETF is the only Australian ETF providing exposure to Australia’s top 50 listed companies, by market capitalisation. SFY provides a low-cost way to invest in the ASX’s top 50 companies through a single fund.
With our numbers for Oct 2020, SFY’s FUM stood at $615.81 million. Since the SFY’s FUM is over $100 million, our investing team would say the ETF has met our minimum criteria for the total amount invested, otherwise known as FUM. A very sustainable ETF in the Index sector should be able to scale well and become profitable for the ETF issuer.
Are the fees for the SFY ETF bad?
SPDR, the ETF issuer, charges a yearly management fee of 0.29% for the SFY ETF. Meaning, if you invested $2,000 for a full 12-month period you could expect to pay a base management fee of around $5.80.
This management fee is below the average for all ETFs on our Best ETFs Australia list of ETFs. However, you might still be able to find a cheaper ETF for less.
If you want to learn more about the SFY ETF, you should know that you can access our free investment report.
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