If you’re looking for an ASX ETF in the Commodities sector, chances are, the Perth Mint Gold ETF (ASX: PMGOLD) is an ETF you’re considering.
How Australian investors can use 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.
PMGOLD exceeds our minimum market cap (FUM) criteria
The PMGOLD ETF had $507.73 million of money invested when we last pulled the monthly numbers. Given PMGOLD’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.
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Don’t forget PMGOLD fees
With a yearly management fee of 0.15% charged by Perth Mint, if you invested $2,000 in the PMGOLD ETF for a full year you could expect to pay management fees of around $3.00. 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 PMGOLD ETF, the most recent average monthly buy-sell spread we gathered (May 2020) was 0.18%. 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.
If you’re weighing up the PMGOLD ETF, keep in mind that this is just a brief introduction to the ETF. Indeed, before doing anything, take a look at our free Perth Mint PMGOLD report. And while you’re at it, consider searching our complete list of ASX ETFs for similar ETFs in the Commodities sector, to do a good comparison.