Why we’re watching BetaShares’s Geared US Equity Fund Currency Hedged (Hedge Fund) ETF

Australian and ASX-listed ETFs like the BetaShares GGUS ETF (ASX: GGUS) are gaining more attention than ever because of how easy they make it for investors to get exposure to the International shares sector.

What does the GGUS do in a portfolio?

The BetaShares GGUS Fund is an internally geared fund, investing in the largest 500 US-listed companies by market capitalisation.

The GGUS ETF is not yet at our $100m minimum FUM level

As at the end of last month, the GGUS ETF had $38.53 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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GGUS ETF fees reviewed

With a yearly management fee of 0.8% charged by BetaShares, if you invested $2,000 in the GGUS ETF for a full year you could expect to pay management fees of around $16.00. 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 GGUS ETF, the most recent average monthly buy-sell spread we gathered (April 2020) was 0.28%. 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 GGUS ETF. Before doing anything, take a look at our BetaShares GGUS report – it’s free. While you’re at it, don’t forget to search our complete list of ASX ETFs.

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Disclaimer: Any information contained in this article is limited to general financial advice/information only. The information should not be relied upon because it has not taken into account your specific needs, goals or objectives. Please, consult a licenced and trusted financial adviser before acting on the information. Past performance is no guarantee of future performance. Nothing in this article should be considered a guarantee. Investing is risky and can result in capital loss. By reading this website, you acknowledge this warning and agree to our terms & conditions available here. This article is authorised by Owen Raszkiewicz of The Rask Group Pty Ltd.

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