Getting exposure to the Australian shares sector has never been easier thanks to ASX ETFs like the iShares Edge MSCI Australia Multifactor ETF (ASX: AUMF). That said, no matter how easy it seems to be, we think it’s still important to do your own ETF review.
How the AUMF ETF could be used in portfolios
The iShares AUMF ETF provides investors with the performance of MSCI Australia IMI Diversified Multiple Factor (AUD) Index, before fees and expenses. This index is composed of Australian equities that have favourable exposure to four target style factors (quality, value, size and momentum).
The AUMF ETF is yet to reach our FUM target
The iShares AUMF ETF had $38.68 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 iShares, 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.
AUMF’s fees & costs explained
iShares charges investors a yearly management fee of 0.30% for the AUMF ETF. This means that if you invested $2,000 in AUMF for a full year, you could expect to pay management fees of around $6.00.
For context, the average management fee (MER) of all ETFs covered by Best ETFs Australia on our complete list of ASX ETFs is 0.51% or around $10.20 per $2,000 invested. Keep in mind, small changes in fees can make a big difference after 10 or 20 years.
Bottom line
This is just a quick overview of the AUMF ETF. Before ‘testing the depth of water with both feet’ so to speak, be sure to read the AUMF ETF’s Product Disclosure Statement (PDS), available on the iShares website, or speak to your financial adviser. For another handy resource, take a look at our iShares AUMF report. You can also use our complete list of ASX ETFs to search for a few different ETFs in the sector and conduct a side-by-side comparison using everything you’ve learned here.
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