Don’t you wonder if now is the time to start analysing the SPDR S&P/ASX Australian Bond Fund ETF (ASX: BOND) and iShares Government Inflation ETF (ASX: ILB)? These Exchange-Traded Funds (ETFs) operate in the Fixed interest – Australia sector, a key sector for diversified portfolios.
Is the BOND ETF a good investment? Here’s where you start…
The name’s… the SPDR BOND ETF. BOND invests in Australian bonds which are investment grade and denominated in Australian dollars with maturities more than one year.
According to our most recent data, the BOND ETF had $49.25 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.
Get our team’s BOND ETF review, available free when you click this link: access the free investment report.
A quick take of the ILB ETF
The iShares ILB ETF provides investors with exposure to the performance of a segment of the Australian bond market comprised of inflation-linked fixed income securities.
With our numbers for Oct 2020, ILB’s FUM stood at $160.09 million. Since the ILB’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 ILB ETF bad?
iShares, the ETF issuer, charges a yearly management fee of 0.18% for the ILB ETF. Meaning, if you invested $2,000 for a full 12-month period you could expect to pay a base management fee of around $3.60.
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.
Did you know: you can get our full ETF review of ILB by clicking here?