Investing your money to get portfolio exposure to the International shares sector has never been easier thanks to ETFs such as the iShares MSCI EAFE ETF (ASX: IVE). However, no matter how easy it seems to be, we think it’s still important to do your own ETF review.
1. What is the iShares IVE used for?
The iShares IVE ETF provides investors with exposure to over 900 companies from Europe, Australia, Asia, and the Far East. This is a low-cost way to access a variety of global companies through a single fund.
2. Has it reached scale (FUM)?
The IVE ETF had $358.7 million of money invested when we last pulled the monthly numbers. Given IVE’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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3. IVE ETF fees explained
With a yearly management fee of 0.31% charged by iShares, if you invested $2,000 in the IVE ETF for a full year you could expect to pay management fees of around $6.20. 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 IVE ETF, the most recent average monthly buy-sell spread we gathered (May 2020) was 0.33%. 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.
What to do now
Before testing the water with both feet or diving straight into buying the IVE ETF, please read the ETF’s Product Disclosure Statement (PDS). Also, be sure to take a look at our iShares IVE report. While you’re on our website, use our complete list of ASX ETFs to search for a few different ETFs in the sector and conduct a side-by-side comparison using everything you’ve learned here.