Getting exposure to the International shares sector has never been easier thanks to ASX ETFs like the Platinum Funds Management Asia Fund (Quoted Managed Hedge Fund) ETF (ASX: PAXX). However, no matter how easy it seems to be, we think it’s still important to do your own ETF review.
How to use the Platinum Funds Management Asia Fund (Quoted Managed Hedge Fund) ETF
The Platinum PAXX Fund is an actively-managed fund that invests in a diversified portfolio of Asian companies, excluding Japan. The fund typically selects between 50-100 Asian companies that the investment team at Platinum believe to be undervalued by the market.
PAXX exceeds our minimum market cap (FUM) criteria
The PAXX ETF had $135.99 million of money invested when we last pulled the monthly numbers. Given PAXX’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. PAXX ETF fees & costs explained
With a yearly management fee of 1.1% charged by Platinum Funds Management, if you invested $2,000 in the PAXX ETF for a full year you could expect to pay management fees of around $22.00. 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 PAXX ETF, the most recent average monthly buy-sell spread we gathered (May 2020) was 0.67%. Remember, the lower (or ‘tighter’) the buy-sell spread, the better. This buy-sell spread was above the average ETF spread of 0.45%, which means the PAXX ETF has more slippage than the average ETF (that’s a bad thing).
Before ‘testing the water with both feet’ so to speak, be sure to read the PAXX ETF’s Product Disclosure Statement (PDS), available on the Platinum Funds Management website, or speak to your financial adviser. Also, be sure to take a look at our Platinum Funds Management PAXX 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.