2020 ETF watch: BetaShares AAA & iShares IAA

On the ASX, the BetaShares Australian High Interest Cash ETF (ASX: AAA) and iShares S&P Asia 50 ETF (ASX: IAA) are two ASX ETFs worthy of closer inspection.

What the BetaShares AAA does for investors

The BetaShares AAA ETF provides investors with exposure to Australian cash, without the need to open a bank account or have capital locked up in a term deposit.

As at the end of last month, the AAA ETF had $1754.93 million of money invested. Given AAA’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 Cash – Australian sector because we believe that relative to smaller ETFs, achieving this amount of FUM derisks the ETF.

Fees & costs

The yearly management fee on the AAA ETF is 0.18%. The issuer, BetaShares, takes this out automatically.

What this fee means is, if you invested, say, $2,000 in the AAA ETF for a full year you could expect to pay management fees of around $3.60. These fees would be automatically deducted from your investment. This does not include any performance fees, and it’s different from the fee you pay to your brokerage provider (e.g. CommSec, NabTrade, SelfWealth, etc.) to buy or sell the ETF. Importantly, you should also be mindful of the ‘spread‘ for the ETF.

Is the ETF too expensive?

The easiest way to know if the ETF is too costly is to compare it with other ETFs in the same sector, and against the industry average. The average management fee (MER) across all of the ETFs covered by Best ETFs Australia is 0.54%, which is around $10.80 per $2,000 invested. Keep in mind, small changes in fees can make a big difference after 10 or 20 years. What’s more, you should read the AAA Product Disclosure Statement (PDS) because it has the complete and updated information on all fees.

Side note: did you know you can access our full review of the AAA ETF by clicking here?

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Why does the iShares IAA ETF do?

The iShares IAA ETF provides exposure to the performance of 50 large, established Asian companies listed on the stock exchanges of China, Hong Kong, South Korea, Singapore, Taiwan, and Macau.

At the end of April 2020, IAA’s FUM stood at $523.08 million. With IAA’s FUM over $100 million, we say the ETF has met our minimum criteria for the total amount invested. However, in reality, a very sustainable ETF in the Index sector should be able to scale well beyond that amount.

Are IAA’s fees too high?

iShares charge a yearly management fee of 0.5% for the IAA ETF. Meaning, with $2,000 invested for 12 months you can expect to pay a base management fee of around $10.00.

The management fee is above the average for all ETFs on our radar, but keep in mind the ETF may be able to justify it.

If you want to learn more about the IAA ETF, you should know that you can access our free investment report.

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Disclaimer: Any information contained in this article is limited to general financial advice/information only. The information should not be relied upon because it has not taken into account your specific needs, goals or objectives. Please, consult a licenced and trusted financial adviser before acting on the information. Past performance is no guarantee of future performance. Nothing in this article should be considered a guarantee. Investing is risky and can result in capital loss. By reading this website, you acknowledge this warning and agree to our terms & conditions available here. This article is authorised by Owen Raszkiewicz of The Rask Group Pty Ltd.

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