In this article, we’ll try to explain why the SPDR S&P 500 Trust ETF (ASX: SPY) and BetaShares Australian High Interest Cash ETF (ASX: AAA) are two ASX ETFs worth taking a look at in FY21.
Some things you should know about the SPY ETF
The SPDR SPY ETF is the oldest ETF in the world and provides exposure to the 500 largest US-listed shares. These 500 shares represent approximately 80% of the total market capitalisation of the US stock market.
According to our most recent data, the SPY ETF had $80.25 million of money invested. Given its funds under management (also known as FUM or ‘market cap’) is less than $100 million, you should consider if this ETF is still too small and if it is sustainable for the ETF issuer. At Best ETFs we say an ETF with more than $100 million invested is typically more sustainable than one with less than $100 million (at least). However, there are exceptions to this general rule, especially if the ETF issuer/provider is reputable and committed to growing the ETF’s FUM through effective marketing strategies and distribution to financial advisers.
Like the look of the SPY ETF? Grab our ETF free investment report.
The AAA ETF – a quick look for savvy investors
The BetaShares AAA ETF provides investors with exposure to Australian cash, without the need to open a bank account or have capital locked up in a term deposit.
With our numbers for July 2021, AAA’s FUM stood at $2132.37 million. Since the AAA’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 AAA ETF bad?
BetaShares, the ETF issuer, charges a yearly management fee of 0.18% for the AAA ETF. Meaning, if you invested $2,000 for a full 12-month period you could expect to pay a base management fee of around $3.60.
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 BetaShares AAA 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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