1. BetaShares BNKS ETF (ASX:BNKS) – what you need to know
If you’re looking for an ETF made up entirely of global banks (ex-Australia), then BNKS provides a solution. This ETF tracks the Nasdaq Global ex-Australia Banks Hedged AUD Index.
As at the end of last month, the BNKS ETF had $20 million of money invested. Since its 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. At Best ETFs we say an ETF with more than $100 million invested is typically more sustainable than one with less than $100 million (at least). 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.
Fees & costs
The yearly management fee on the BNKS ETF is 0.57%. The issuer, BetaShares, takes this out automatically.
What this fee means is, if you invested, say, $2,000 in the BNKS ETF for a full year you could expect to pay management fees of around $11.40. 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 BNKS Product Disclosure Statement (PDS) because it has the complete and updated information on all fees.
If you like the sound of the BNKS ETF, view our free investment report.
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2. The basics of the iShares IJH ETF (ASX:IJH)
The iShares IJH ETF provides investors with exposure to mid-cap US companies. This is a low-cost way to access a specific segment of the US market through a single fund.
At the end of April 2020, IJH’s FUM stood at $117.88 million. With IJH’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 IJH’s fees too high?
iShares charge a yearly management fee of 0.07% for the IJH ETF. Meaning, with $2,000 invested for 12 months you can expect to pay a base management fee of around $1.40.
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 get our full BNKS ETF review, click here now.