Would a shrewd ASX investor consider the Fidante Partners Limited ActiveX Ardea Real Outcome Bond Fund (Managed Fund) ETF (ASX: XARO) and BetaShares Sustainability leaders Diversified Bond ETF – Currency Hedged ETF (ASX: GBND) right about now? These two ASX ETFs provide exposure to the Fixed interest – International sector, and aim to make investing in it as convenient as possible.
The Fidante Partners Limited XARO ETF (ASX:XARO)
The ActiveX Ardea XARO Fund provides investors with exposure to an actively managed portfolio of fixed income products, particularly government bonds, while implementing risk management strategies that aim to provide protection from interest rate fluctuations and general market volatility.
According to our most recent data, the XARO ETF had $424.21 million of money invested. With XARO’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 – International 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 XARO ETF is 0.50%. The issuer, Fidante Partners Limited, collects this fee automatically.
Meaning, if you invested $2,000 in the XARO ETF for a full year you could expect to pay management fees of around $10.00. 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 XARO Product Disclosure Statement (PDS), available on the ETF issuer’s website, because it will detail the fees, tax implications and the latest information.
These are high level ideas or basics of the XARO ETF. To learn more about it, click through to access our free investment review.
The BetaShares GBND ETF (ASX:GBND)
The BetaShares GBND ETF provides investors with exposure to a portfolio of fixed-rate, investment-grade global and Australian bonds, with a significant allocation to “green bonds” which are issued to directly fund projects that have positive environmental and/or climate benefits.
With our numbers for December 2020, GBND’s FUM stood at $106.39 million. Since the GBND’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 Ethical sector should be able to scale well and become profitable for the ETF issuer.
Are the fees for the GBND ETF bad?
BetaShares, the ETF issuer, charges a yearly management fee of 0.49% for the GBND ETF. Meaning, if you invested $2,000 for a full 12-month period you could expect to pay a base management fee of around $9.80.
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 you read the Product Disclosure Statement (PDS) or speak to your financial adviser about the GBND ETF report (both are very important), take a look at our free investment review.
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