The iShares S&P 500 AUD Hedged ETF (ASX: IHVV) is one to watch and in this short article we’ll share arguably the three most important metrics to consider when you’re reviewing an ETF.
How the IHVV ETF could be used in portfolios
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.
IHVV surpasses our minimum level for funds under management
The IHVV ETF had $514.18 million of money invested when we last pulled the monthly numbers. Given IHVV’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 International shares sector because we believe that relative to smaller ETFs, achieving this amount of FUM derisks the ETF.
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Watch: the management fees and costs
With a yearly management fee of 0.1% charged by iShares, if you invested $2,000 in the IHVV ETF for a full year you could expect to pay management fees of around $2.00. 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 IHVV ETF, the most recent average monthly buy-sell spread we gathered (April 2020) was 0.22%. 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.
If you’re weighing up the IHVV ETF, keep in mind that this is just a brief introduction to the ETF. Indeed, before doing anything, take a look at our free iShares IHVV report. And while you’re at it, consider searching our complete list of ASX ETFs for similar ETFs in the International shares sector, to do a good comparison.
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