How the SSO ETF fits into an ASX portfolio
The SPDR SSO ETF provides exposure to a diversified portfolio of Australian companies and tracks the S&P/ASX Small Ordinaries Index. SSO is designed to capture the performance of the top 200 Australian small companies based on market cap, ranking from 101 to 300.
The SPDR SSO ETF could be used to invest in Australian companies outside the top 100, 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.
SSO ETF is not yet at our $100m minimum FUM level
The SPDR SSO ETF had $25.04 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 SPDR, 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.
What about management fees and costs?
SPDR charges investors a yearly management fee of 0.50% for the SSO ETF. This means that if you invested $2,000 in SSO for a full year, you could expect to pay management fees of around $10.00.
For context, the average management fee (MER) of all ETFs covered by Best ETFs Australia on our complete list of ASX ETFs is 0.5% or around $10.00 per $2,000 invested. Keep in mind, small changes in fees can make a big difference after 10 or 20 years.
Next steps
Before buying any ETF based on what you read here on Best ETFs, check out our SPDR SSO report – it’s completely free! Then, search our complete list of ASX ETFs to do a proper side-by-side comparison of your chosen sector or thematic.
