Like us, you’re probably looking at the iShares MSCI Japan ETF (ASX: IJP) and thinking now could be a good to consider taking a closer look.
How the IJP ETF could be used in portfolios
The iShares IJP ETF provides investors with exposure to around 85% of the Japanese stock market. This is a low-cost way to access a specific market through a single fund.
IJP’s market capitalisation (total amount invested) meets our hurdle
The IJP ETF had $282.88 million of money invested when we last pulled the monthly numbers. Given IJP’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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IJP costs and yearly fees
With a yearly management fee of 0.47% charged by iShares, if you invested $2,000 in the IJP ETF for a full year you could expect to pay management fees of around $9.40. 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 IJP ETF, the most recent average monthly buy-sell spread we gathered (April 2020) was 0.35%. 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 IJP 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 IJP 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.