Are you sitting back and thinking it could be time to start analysing the Betashares Geared Australian Equity Fund (Hedge Fund) ETF (ASX: GEAR) and BetaShares Crude Oil Index ETF-Currency Hedged (Synthetic) ETF (ASX: OOO)? These two ASX ETFs aim to provide conveninent exposure to the Australian shares and Commodities sectors, respectively.
Why investors choose the GEAR ETF
BetaShares GEAR Fund is an internally geared fund, investing in the largest 200 companies on the ASX, by market capitalisation.
As at the end of last month, the GEAR ETF had $174.24 million of money invested. Given GEAR’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.
Fees & costs
The yearly management fee on the GEAR ETF is 0.8%. The issuer, Betashares, takes this out automatically.
What this fee means is, if you invested, say, $2,000 in the GEAR ETF for a full year you could expect to pay management fees of around $16.00. 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 GEAR Product Disclosure Statement (PDS), available on the ETF issuer’s website, because it has the complete and up-to-date information.
Make sure you check out our GEAR ETF report, available free when you clock here: access the free investment report.
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A look at the OOO ETF
The BetaShares OOO ETF provides investors with exposure to crude oil futures, hedged into Australian dollars.
At the end of May 2020, OOO’s FUM stood at $228.69 million. With OOO’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 Index sector should be able to scale well beyond that amount.
Are OOO’s fees too high?
BetaShares charge a yearly management fee of 0.69% for the OOO ETF. Meaning, with $2,000 invested for 12 months you can expect to pay a base management fee of around $13.80.
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.
If you like what you’re reading, access our full review of the OOO ETF by clicking here