Like us, you’re probably looking at the iShares Core S&P/ASX 200 ETF (ASX: IOZ) and thinking now could be a good to consider taking a closer look.
How the IOZ ETF could be used in portfolios
The iShares IOZ ETF provides exposure to the largest 200 Australian shares, based on market capitalisation. This is a low-cost way to access top Australian companies through a single fund.
IOZ’s market capitalisation (total amount invested) meets our hurdle
The IOZ ETF had $2127.62 million of money invested when we last pulled the monthly numbers. Given IOZ’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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IOZ costs and yearly fees
With a yearly management fee of 0.09% charged by iShares, if you invested $2,000 in the IOZ ETF for a full year you could expect to pay management fees of around $1.80. For context, the average management fee (MER) of all ETFs covered by Best ETFs Australia on our complete list of ASX ETFs is 0.5% or around $10.00 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 IOZ ETF, the most recent average monthly buy-sell spread we gathered (May 2020) was 0.08%. Remember, the lower (or ‘tighter’) the buy-sell spread, the better. This buy-sell spread was below the average ETF spread of 0.45%, so that’s a good thing.
If you’re weighing up the IOZ 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 IOZ report. And while you’re at it, consider searching our complete list of ASX ETFs for similar ETFs in the Australian shares sector, to do a good comparison.