On the ASX, the Perennial Value/eInvest Income Generator Fund (Managed Fund) ETF (ASX: EIGA) and iShares Core MSCI World All Cap ETF (ASX: IWLD) are two ASX ETFs worthy of closer inspection.
What the Perennial Value/eInvest EIGA does for investors
The eInvest EIGA Fund invests in a diversified portfolio of high-yielding Australian companies and provides distributions on a monthly basis. EIGA is an actively-managed fund, with a focus on capital preservation.
As at the end of last month, the EIGA ETF had $20.21 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 EIGA ETF is 0.8%. The issuer, Perennial Value/eInvest, takes this out automatically.
What this fee means is, if you invested, say, $2,000 in the EIGA ETF for a full year you could expect to pay management fees of around $16.00. This fee is 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. Small changes in fees can make a big difference after 10 or 20 years. To understand all of the fees, you should read the EIGA Product Disclosure Statement (PDS), available on the ETF issuer’s website, because it has the complete and up-to-date information.
Side note: did you know you can access our full review of the EIGA ETF by clicking here?
[ls_content_block slug=”article-advertising-block-2″ para=”paragraphs”]
Why does the iShares IWLD ETF do?
The iShares IWLD ETF provides investors with exposure to a globally diversified portfolio of over 3,800 companies. This is a low-cost way to access global companies from developed markets through a single fund.
At the end of April 2020, IWLD’s FUM stood at $116.48 million. With IWLD’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 IWLD’s fees too high?
iShares charge a yearly management fee of 0.09% for the IWLD ETF. Meaning, with $2,000 invested for 12 months you can expect to pay a base management fee of around $1.80.
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.
If you want to learn more about the IWLD ETF, you should know that you can access our free investment report.
[ls_content_block id=”4954″ para=”paragraphs”]
