On the ASX, the iShares S&P 500 AUD Hedged ETF (ASX: IHVV) and BetaShares Legg Mason Real Income Fund (Managed Fund) ETF (ASX: RINC) are two ASX ETFs worthy of closer inspection.
What the iShares IHVV ETF does for investors
The iShares IHVV ETF provides investors with exposure to the largest 500 US companies. This is a low-cost way to access leading US companies through a single fund.
According to our most recent data, the IHVV ETF had $746.98 million of money invested. With IHVV’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 International shares 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 IHVV ETF is 0.10%. The issuer, iShares, collects this fee automatically.
Meaning, if you invested $2,000 in the IHVV ETF for a full year you could expect to pay management fees of around $2.00. 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 IHVV 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 IHVV ETF by clicking here?
What does the BetaShares RINC ETF do?
The BetaShares Legg Mason RINC ETF is an actively managed fund that invests in companies that own physical assets, like A-REITs, utilities and infrastructure. These companies are expected to grow revenues and profits overtime and provide sustainable dividend income to investors.
With our numbers for December 2020, RINC’s FUM stood at $49.53 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 Active ETF (e.g. ETMF) sector ETFs, using our full list of ETFs.
Are the fees for the RINC ETF bad?
BetaShares, the ETF issuer, charges a yearly management fee of 0.85% for the RINC ETF. Meaning, if you invested $2,000 for a full 12-month period you could expect to pay a base management fee of around $17.00.
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.
If you want to learn more about the RINC ETF, you should know that you can access our free investment report.
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