Australian and ASX-listed ETFs like the Betashares EINC ETF (ASX: EINC) are gaining more attention than ever because of how easy they make it for investors to get exposure to the Australian shares sector.
What does the EINC do in a portfolio?
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 EINC ETF is not yet at our $100m minimum FUM level
As at the end of last month, the EINC ETF had $21.82 million of money invested. 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) because if an ETF is too small it may not be sustainable for an ETF issuer, such as Betashares. However, there are exceptions to this rule of thumb, especially if the ETF issuer/provider is committed to growing the ETF’s FUM to the point where it becomes profitable.
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EINC ETF fees reviewed
With a yearly management fee of 0.85% charged by Betashares, if you invested $2,000 in the EINC ETF for a full year you could expect to pay management fees of around $17.00. This does not include any performance fees earned by the ETF’s manager for doing a good job. For context, the average management fee (MER) of all ETFs covered by Best ETFs Australia on our complete list of ASX ETFs is 0.54% or around $10.80 per $2,000 invested. Keep in mind, small changes in fees can make a big difference after 10 or 20 years.
In addition to a yearly management fee, there are other costs investors must consider, including brokerage and taxes. A specific cost for ETF and mFund investors to consider is the buy-sell spread, which is the slippage or ‘invisible’ cost paid by an investor when he or she buys or sells the ETF. For the EINC ETF, the most recent average monthly buy-sell spread we gathered (April 2020) was 0.49%. Remember, the lower (or ‘tighter’) the buy-sell spread, the better. This buy-sell spread was below the average ETF spread of 0.51%, so that’s a good thing.
Where to from here
These are just some of the considerations or factors you would need to look at when weighing up the EINC ETF. Before doing anything, take a look at our Betashares EINC report – it’s free. While you’re at it, don’t forget to search our complete list of ASX ETFs.