You might be sitting back and considering the BetaShares Legg Mason Equity Income Fund (Managed Fund) ETF (ASX: EINC) and thinking that May could be as good of a time as any to take closer look. Here’s how we would start our research.
Find out what the ETF does
The BetaShares EINC Fund provides investors with an actively managed portfolio of high-yielding Australian companies. Legg Mason Asset Management is the investment manager for this fund.
The BetaShares EINC Fund could be used by investors looking for high dividend paying stocks, from a broad basket of Australia’s largest public companies. The fund focuses on lowering sector and stock concentration, compared to the ASX 200. These Australian companies are likely to grow their profits over time and have a track record of paying regular tax-effective dividends for their shareholders.
EINC’s FUM does not meet our minimum hurdle
The BetaShares EINC ETF had $27.03 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 BetaShares, 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.
Pay attention to yearly costs & fees
BetaShares charges investors a yearly management fee of 0.85% for the EINC ETF. This means that if you invested $2,000 in EINC for a full year, you could expect to pay management fees of around $17.00.
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.
Our takeaway
If you’re thinking about investing in EINC, bear in mind that this is just an introductory glance at the ETF. To explore further, check out our free BetaShares EINC report. And for good measure, search our complete list of ASX ETFs for similar ETFs in the Australian shares sector to do a good comparison.
