Australian and ASX-listed ETFs like the BetaShares QAG ETF (ASX: QAG) are gaining more attention than ever because of how easy they make it for investors to get exposure to the Commodities sector.
What does the QAG do in a portfolio?
The BetaShares QAG ETF provides investors with exposure to a basket of the most significant global agricultural commodities, hedged into Australian dollars.
The QAG ETF is not yet at our $100m ideal FUM level
The QAG ETF had $2.83 million of money invested when we last pulled the monthly numbers. With a 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. We say an ETF with more than $100 million invested is typically more sustainable than one with less than $100 million (at least) because if an ETF is too small it may not be sustainable for an ETF issuer, such as BetaShares. 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.
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QAG ETF fees reviewed
With a yearly management fee of 0.69% charged by BetaShares, if you invested $2,000 in the QAG ETF for a full year you could expect to pay management fees of around $13.80. 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 QAG ETF, the most recent average monthly buy-sell spread we gathered (May 2020) was 0.86%. 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 QAG ETF has more slippage than the average ETF (that’s a bad thing).
Where to from here
These are just some of the considerations or factors you would need to look at when weighing up the QAG ETF. Before doing anything, take a look at our BetaShares QAG report – it’s free. While you’re at it, don’t forget to search our complete list of ASX ETFs.