We think it could be time to run the rule over BetaShares Australian Investment Grade Bond ETF (ASX: CRED) and iShares S&P/ASX 20 ETF (ASX: ILC), two ASX ETFs operate in the Fixed interest – Australia and Australian shares sectors, respectively.
The BetaShares CRED ETF (ASX:CRED)
The BetaShares CRED Fund provides investors with exposure to a portfolio a portfolio of investment-grade, fixed-rate Australian corporate bonds.
As at the end of last month, the CRED ETF had $322.51 million of money invested. Given CRED’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 Fixed interest – Australia 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 CRED ETF is 0.25%. The issuer, BetaShares, takes this out automatically.
What this fee means is, if you invested, say, $2,000 in the CRED ETF for a full year you could expect to pay management fees of around $5.00. 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 CRED Product Disclosure Statement (PDS) because it has the complete and updated information on all fees.
To learn more about the CRED ETF, read our free ETF investment report once you’re done with this article.
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iShares ILC ETF (ASX:ILC)
The iShares ILC ETF provides exposure to the largest 20 Australian stocks, giving you targeted exposure to Australian blue-chip companies. This is a low-cost way to access top Australian companies through a single fund.
At the end of April 2020, ILC’s FUM stood at $298.61 million. With ILC’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 ILC’s fees too high?
iShares charge a yearly management fee of 0.24% for the ILC ETF. Meaning, with $2,000 invested for 12 months you can expect to pay a base management fee of around $4.80.
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 ILC ETF report by clicking here.
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