On the ASX, the Vanguard Australian Property Securities Index ETF (ASX: VAP) and iShares Core Cash ETF (ASX: BILL) are two ASX ETFs worthy of closer inspection.
What the Vanguard VAP ETF does for investors
The Vanguard VAP ETF provides investors with low-cost exposure to listed Australian property companies and real estate investment trusts (REITs).
According to our most recent data, the VAP ETF had $2166.17 million of money invested. With VAP’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 Australian 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 VAP ETF is 0.23%. The issuer, Vanguard, collects this fee automatically.
Meaning, if you invested $2,000 in the VAP ETF for a full year you could expect to pay management fees of around $4.60. 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 0.51%, which is $10.20 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 VAP 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 VAP ETF by clicking here?
What does the iShares BILL ETF do?
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 July 2021, BILL’s FUM stood at $417.16 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.
If you want to learn more about the BILL ETF, you should know that you can access our free investment report.
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