The Betashares Australian Equities Bear (Hedge Fund) ETF (ASX: BEAR) and iShares S&P Midcap ETF (ASX: IJH) are Exchange-Traded Funds (ETFs) operating in the Australian shares and International shares sectors, respectively.
How would an investor add BEAR to a portfolio?
The BetaShares BEAR Fund is designed to provide inverse or opposite exposure to the largest Australian shares, based on market capitalisation. When the S&P/ASX 200 Accumulation Index falls, BEAR aims to generate positive returns for investors.
According to our most recent data, the BEAR ETF had $103.21 million of money invested. With BEAR’s total funds under management (FUM) figure over $100 million, the ETF meets our team’s minimum investment criteria for FUM levels. As a general rule, our team draws the line at $100 million for ETFs in the Australian shares sector because we believe that, relative to smaller ETFs, achieving this amount of FUM lowers the chance that the ETF issuer will close the ETF.
Fees to consider
According to our numbers, the annual management fee on the BEAR ETF is 1.38%. The issuer, Betashares, collects this fee automatically.
Meaning, if you invested $2,000 in the BEAR ETF for a full year you could expect to pay management fees of around $27.60. 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 0.5%, which is $10.00 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 BEAR Product Disclosure Statement (PDS), available on the ETF issuer’s website, because it will detail the fees, tax implications and the latest information.
The BEAR ETF could be one to add to your watchlist. If you want to access our full ETF review, click here to get our full report – it’s totally free.
Getting to know the IJH ETF
The iShares IJH ETF provides investors with exposure to mid-cap US companies. This is a low-cost way to access a specific segment of the US market through a single fund.
With our numbers for Oct 2020, IJH’s FUM stood at $125.28 million. Since the IJH’s FUM is over $100 million, our investing team would say the ETF has met our minimum criteria for the total amount invested, otherwise known as FUM. A very sustainable ETF in the Index sector should be able to scale well and become profitable for the ETF issuer.
Are the fees for the IJH ETF bad?
iShares, the ETF issuer, charges a yearly management fee of 0.07% for the IJH ETF. Meaning, if you invested $2,000 for a full 12-month period you could expect to pay a base management fee of around $1.40.
This management fee is below the average for all ETFs on our Best ETFs Australia list of ETFs. However, you might still be able to find a cheaper ETF for less.
Picking over ETFs seems too easy to be true: ‘just pick one and put it in your bottom-drawer’. However, it’s important to get it right the first time so that you won’t end up having to chop-and-change positions (and potentially pay extra tax). To make your life a little easier, if you’re looking at the IJH ETF, make sure you click here to access our analyst’s investment report. It’s free.
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