Like us, you might have noticed the iShares Edge MSCI Australia Multifactor ETF (ASX: AUMF) and think that now could be a good time to consider taking a closer look. Here’s what ETF investors need to know.
1. What does the AUMF ETF do for investors?
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 iShares AUMF ETF uses a rules-based strategy to seek outperformance over the long-term. Investors could use this ETF to get exposure to a basket of Australian public companies that targets four drivers of return: quality, value, size, and momentum. For example, the AUMF fund looks for companies with healthy balance sheets (quality) that are cheap relative to fundamentals (value), smaller in size and with a share price moving in an upward direction (momentum).
2. Funds under management (FUM)
The iShares AUMF ETF had $44.64 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.
3. Don’t forget about the fees & costs
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.
Now what?
These are just a few of the considerations or factors you would need to look at when running the rule over the AUMF ETF. Before you go any further, take a look at our free iShares AUMF report. And while you’re at it, don’t forget to search our complete list of ASX ETFs.
