In this article, we’ll try to explain why the Vanguard Australian Fixed Interest Index ETF (ASX: VAF) and iShares Core Cash ETF (ASX: BILL) are two ASX ETFs worth taking a look at in FY21.
Some things you should know about the VAF ETF
The Vanguard VAF ETF provides investors with exposure to a portfolio of Australian Commonwealth Government bonds, state government bonds and bonds from treasury corporations, as well as some investment-grade corporate debt.
According to our most recent data, the VAF ETF had $1552.46 million of money invested. With VAF’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.
Like the look of the VAF ETF? Grab our ETF free investment report.
The BILL ETF – a quick look for savvy investors
The iShares BILL ETF provides investors with exposure to short-term Australian dollar-denominated bank bills with term to maturities of up to three months.
With our numbers for Dec 2020, BILL’s FUM stood at $539.51 million. Since the BILL’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 BILL ETF bad?
iShares, the ETF issuer, charges a yearly management fee of 0.07% for the BILL ETF. Meaning, if you invested $2,000 for a full 12-month period you could expect to pay a base management fee of around $1.40.
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.
The iShares BILL ETF might be one idea for the watchlist but before you go any further, click here to get our full ETF review – it’s free.
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