Got your analyst shoes on today? The Schroder Investment Management Australia Limited Real Return Fund (Managed Fund) ETF (ASX: GROW) and Perth Mint Gold ETF (ASX: PMGOLD) are two ASX ETFs operating in the Multi-Asset and Commodities sectors, respectively.
What does the GROW do in a portfolio?
The Schroder GROW Fund is a multi-asset class, actively-managed portfolio of global assets. The fund aims to deliver a return of 5% per annum above inflation (before fees), over a rolling 3-year period.
As at the end of last month, the GROW ETF had $39.12 million of money invested. Since its funds under management (FUM) or ‘market cap’ figure of less than $100 million, it’s important to consider if this ETF is still too small. At Best ETFs we say an ETF with more than $100 million invested is typically more sustainable than one with less than $100 million (at least). However, there are exceptions to this rule of thumb, especially if the ETF issuer/provider is committed to growing the ETF’s FUM to the point where it becomes profitable.
Fees & costs
The yearly management fee on the GROW ETF is 0.9%. The issuer, Schroder Investment Management Australia Limited, takes this out automatically.
What this fee means is, if you invested, say, $2,000 in the GROW ETF for a full year you could expect to pay management fees of around $18.00. 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 GROW Product Disclosure Statement (PDS), available on the ETF issuer’s website, because it has the complete and up-to-date information.
The GROW 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 PMGOLD ETF
The Perth Mint PMGOLD ETF represents a right to gold created by The Perth Mint, Australia’s largest fully integrated precious metals enterprise. The ETF gives investors the ability to purchase Government-backed gold via the ASX, rather than holding physical bars themselves.
At the end of May 2020, PMGOLD’s FUM stood at $507.73 million. With PMGOLD’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 PMGOLD’s fees too high?
Perth Mint charge a yearly management fee of 0.15% for the PMGOLD ETF. Meaning, with $2,000 invested for 12 months you can expect to pay a base management fee of around $3.00.
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 GROW ETF, consider clicking here to access our comprehensive investment report. It’s free.