Australian and ASX-listed ETFs like the iShares ILC ETF (ASX: ILC) are gaining more attention than ever because of how easy they make it for investors to get exposure to the Australian shares sector.
What does the ILC do in a portfolio?
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.
ILC surpasses our minimum level for funds under management
The ILC ETF had $298.61 million of money invested when we last pulled the monthly numbers. Given ILC’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 Australian shares sector because we believe that relative to smaller ETFs, achieving this amount of FUM derisks the ETF.
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ILC ETF fees reviewed
With a yearly management fee of 0.24% charged by iShares, if you invested $2,000 in the ILC ETF for a full year you could expect to pay management fees of around $4.80. 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 ILC 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.
Where to from here
These are just some of the considerations or factors you would need to look at when weighing up the ILC ETF. Before doing anything, take a look at our iShares ILC report – it’s free. While you’re at it, don’t forget to search our complete list of ASX ETFs.