Would a shrewd ASX investor consider the BetaShares S&P 500 Yield Maximiser Fund (Managed Fund) ETF (ASX: UMAX) and BetaShares Global Banks ETF – Currency Hedged ETF (ASX: BNKS) right about now? These two ASX ETFs provide exposure to the International shares sector, and aim to make investing in it as convenient as possible.
The BetaShares UMAX ETF (ASX:UMAX)
The BetaShares UMAX ETF is an actively managed portfolio that provides investors with exposure to US equities, with a focus on enhancing the ETFs dividend yield using a ‘covered call’ strategy.
According to our most recent data, the UMAX ETF had $86.64 million of money invested. Given its funds under management (also known as FUM or ‘market cap’) is less than $100 million, you should consider if this ETF is still too small and if it is sustainable for the ETF issuer. 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 general rule, especially if the ETF issuer/provider is reputable and committed to growing the ETF’s FUM through effective marketing strategies and distribution to financial advisers.
Fees to consider
According to our numbers, the annual management fee on the UMAX ETF is 0.79%. The issuer, BetaShares, collects this fee automatically.
Meaning, if you invested $2,000 in the UMAX ETF for a full year you could expect to pay management fees of around $15.80. This fee is different from the fee you pay to your brokerage provider (e.g. CommSec, NabTrade, SelfWealth, etc.), which is the fee to buy or sell the ETF. In addition to a management fee charged by the issuer, be mindful to check the ‘spread‘ for the ETF.
A fee comparison
Fees aren’t the only key consideration for ETF investors, but it’s an easy thing to do. To understand if the ETF you’re looking at is too costly, compare it with other ETFs from the same sector, and against the industry average. For example, the average management fee (MER) across all of the ETFs covered by the Best ETFs Australia team was 0.51%, which is $10.20 per $2,000 invested. Keep in mind that small changes in the fees paid can make a big difference after 10 or 20 years. You should read the UMAX Product Disclosure Statement (PDS), available on the ETF issuer’s website, because it will detail the fees, tax implications and the latest information.
These are high level ideas or basics of the UMAX ETF. To learn more about it, click through to access our free investment review.
The BetaShares BNKS ETF (ASX:BNKS)
If you’re looking for an ETF made up entirely of global banks (ex-Australia), then BNKS provides a solution. This ETF tracks the Nasdaq Global ex-Australia Banks Hedged AUD Index.
With our numbers for July 2020, BNKS’s FUM stood at $20 million. Given it has less than $100 million invested, ask yourself (or your adviser) if the ETF is still too small (and if you should wait to buy into it). If you’re concerned the ETF might not be established enough, compare it alongside one of the other Index sector ETFs, using our full list of ETFs.
Are the fees for the BNKS ETF bad?
BetaShares, the ETF issuer, charges a yearly management fee of 0.57% for the BNKS ETF. Meaning, if you invested $2,000 for a full 12-month period you could expect to pay a base management fee of around $11.40.
The management fee is above the average for all ETFs on our list of ASX ETFs, but keep in mind the ETF may be able to justify the higher price tag with superior performance over time.
Before you read the Product Disclosure Statement (PDS) or speak to your financial adviser about the BNKS ETF report (both are very important), take a look at our free investment review.