If you’re on the hunt for exposure to the Australian shares sector, it could be worth adding the iShares S&P/ASX Small Ordinaries ETF (ASX: ISO) to your ASX watchlist. Let’s take a closer look at this iShares ETF.
What is the ISO ETF used for?
The iShares ISO ETF provides exposure to 200 small cap Australian shares. This is a low-cost way to access small Australian companies through a single fund.
The iShares ISO ETF could be used by investors to get exposure to a broad basket of smaller Australian listed companies, which are likely to grow their profits over time. Navigating away from the largest ASX companies removes a lot of the exposure to the financial sector and could diversify your Australian portfolio allocation.
Keep an eye on FUM
The iShares ISO ETF had $156.63 million of money invested when we last pulled the monthly numbers. Given ISO’s total funds under management (FUM) figure is over $100 million, the ETF has met our minimum criteria for the total amount of money invested, otherwise known as FUM. We draw 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 de-risks the ETF.
Fees and costs for investors
iShares charges investors a yearly management fee of 0.55% for the ISO ETF. This means that if you invested $2,000 in ISO for a full year, you could expect to pay management fees of around $11.00.
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.
Summary
These are just some of the considerations or factors you would need to look at when weighing up the ISO ETF. Before doing anything, take a look at our iShares ISO report – it’s free. While you’re at it, don’t forget to search our complete list of ASX ETFs.
