It’s time to put iShares Core Cash ETF (ASX: BILL) and the iShares Core MSCI World All Cap AUD Hedged ETF (ASX: IHWL) side-by-side.
Why would an investor want the own the iShares Core Cash ETF?
The iShares BILL ETF provides investors with exposure to short-term Australian dollar-denominated bank bills with term to maturities of up to three months.
As at the end of last month, the BILL ETF had $512.32 million of money invested. Given BILL’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 BILL ETF is 0.07%. The issuer, iShares, takes this out automatically.
What this fee means is, if you invested, say, $2,000 in the BILL ETF for a full year you could expect to pay management fees of around $1.40. 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 BILL Product Disclosure Statement (PDS) because it has the complete and updated information on all fees.
Don’t stop there, to get our full BILL ETF review, click here now.
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iShares Core MSCI World All Cap AUD Hedged ETF
The iShares IHWL ETF provides investors with exposure to a diversified portfolio of global companies. This is a low-cost way to access a variety of global companies through a single fund.
At the end of April 2020, IHWL’s FUM stood at $80.85 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 IHWL’s fees too high?
iShares charge a yearly management fee of 0.12% for the IHWL ETF. Meaning, with $2,000 invested for 12 months you can expect to pay a base management fee of around $2.40.
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.
To keep discovering what makes the BILL ETF ‘tick’, so to speak, have a read our free ETF investment report.
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