Are you sitting back and thinking it could be time to start analysing the Betashares Australian Equities Bear (Hedge Fund) ETF (ASX: BEAR) and iShares S&P 500 AUD Hedged ETF (ASX: IHVV)? These two ASX ETFs aim to provide conveninent exposure to the Australian shares and International shares sectors, respectively.
Why investors choose the BEAR ETF
The BetaShares BEAR Fund is designed to provide inverse or opposite exposure to the largest Australian shares, based on market capitalisation. When the S&P/ASX 200 Accumulation Index falls, BEAR aims to generate positive returns for investors.
As at the end of last month, the BEAR ETF had $129 million of money invested. Given BEAR’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 BEAR ETF is 1.38%. The issuer, Betashares, takes this out automatically.
What this fee means is, if you invested, say, $2,000 in the BEAR 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 BEAR Product Disclosure Statement (PDS) because it has the complete and updated information on all fees.
Make sure you check out our BEAR ETF report, available free when you clock here: access the free investment report.
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A look at the IHVV ETF
The iShares IHVV ETF provides investors with exposure to the largest 500 US companies. This is a low-cost way to access leading US companies through a single fund.
At the end of April 2020, IHVV’s FUM stood at $514.18 million. With IHVV’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 IHVV’s fees too high?
iShares charge a yearly management fee of 0.1% for the IHVV ETF. Meaning, with $2,000 invested for 12 months you can expect to pay a base management fee of around $2.00.
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 like what you’re reading, access our full review of the IHVV ETF by clicking here