We think it could be time to run the rule over Betashares Australian Strong Bear (Hedge Fund) ETF (ASX: BBOZ) and iShares Global High Yield Bond (AUD Hedged) ETF (ASX: IHHY), two ASX ETFs operate in the Australian shares and Fixed interest – International sectors, respectively.
The Betashares BBOZ ETF (ASX:BBOZ)
The BetaShares BBOZ Fund is designed to provide protection from a declining Australian equity market. When the S&P/ASX 200 Accumulation Index falls, BBOZ aims to generate magnified returns for investors.
As at the end of last month, the BBOZ ETF had $377.61 million of money invested. Given BBOZ’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 derisks the ETF.
Fees & costs
The yearly management fee on the BBOZ ETF is 1.38%. The issuer, Betashares, takes this out automatically.
What this fee means is, if you invested, say, $2,000 in the BBOZ ETF for a full year you could expect to pay management fees of around $27.60. 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 BBOZ Product Disclosure Statement (PDS) because it has the complete and updated information on all fees.
To learn more about the BBOZ ETF, read our free ETF investment report once you’re done with this article.
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iShares IHHY ETF (ASX:IHHY)
The iShares IHHY ETF provides investors with exposure to the performance of high-yield corporate bonds across global markets and sectors, hedged into Australian dollars. This is a simple way to get exposure to high-yield corporate bonds across global developed markets in a single fund.
At the end of April 2020, IHHY’s FUM stood at $56.15 million. With less than $100 million invested, it’s important to consider if this ETF is still too small and you should wait to buy in. If you’re worried about the size of the ETF, consider comparing it alongside some of the other Index sector ETFs, using our full list.
Are IHHY’s fees too high?
iShares charge a yearly management fee of 0.56% for the IHHY ETF. Meaning, with $2,000 invested for 12 months you can expect to pay a base management fee of around $11.20.
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.
Did you know that you get access to our free investment report on ? View the free IHHY ETF report by clicking here.