Got your analyst shoes on today? The ETF Securities Physical Silver ETF (ASX: ETPMAG) and Magellan Infrastructure Fund (Currency Hedged) (Managed Fund) ETF (ASX: MICH) are two ASX ETFs operating in the Commodities and International shares sectors, respectively.
What does the ETPMAG do in a portfolio?
The ETFS ETPMAG ETF provides investors with access to the precious metal of silver, by seeking to achieve a return equivalent to the movements in the silver spot price, before fees and expenses.
As at the end of last month, the ETPMAG ETF had $126.12 million of money invested. Given ETPMAG’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 Commodities sector because we believe that relative to smaller ETFs, achieving this amount of FUM derisks the ETF.
Fees & costs
The yearly management fee on the ETPMAG ETF is 0.49%. The issuer, ETF Securities, takes this out automatically.
What this fee means is, if you invested, say, $2,000 in the ETPMAG ETF for a full year you could expect to pay management fees of around $9.80. 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 0.5%, which is around $10.00 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 ETPMAG Product Disclosure Statement (PDS), available on the ETF issuer’s website, because it has the complete and up-to-date information.
The ETPMAG ETF might be one for the watchlist, but if you want to access our full ETF review, simply click here to get our full report – it’s free.
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The ins-and-outs of the MICH ETF
The Magellan MICH Fund is an actively-managed portfolio that invests in a select array of international infrastructure companies. The fund typically selects between 20-40 global equities from the infrastructure sector and hedges its exposure against the Australian dollar to manage currency risks.
At the end of May 2020, MICH’s FUM stood at $617.18 million. With MICH’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 Property & Infrastructure sector should be able to scale well beyond that amount.
Are MICH’s fees too high?
Magellan charge a yearly management fee of 1.05% for the MICH ETF. Meaning, with $2,000 invested for 12 months you can expect to pay a base management fee of around $21.00.
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.
Choosing between ETFs might seem easy, but it’s important to try and get it right the first time so you don’t end up having to chop-and-change positions (and potentially pay tax). To make your life a little easier, if you’re looking at the ETPMAG ETF, consider clicking here to access our comprehensive investment report. It’s free.
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