On the ASX, the BetaShares Australian Bank Senior Floating Rate Bond ETF (ASX: QPON) and Fidante Partners Limited ActiveX Ardea Real Outcome Bond Fund (Managed Fund) ETF (ASX: XARO) are two ASX ETFs worthy of closer inspection.
What the BetaShares QPON ETF does for investors
The BetaShares QPON ETF provides investors with exposure to a portfolio of some of the largest and most liquid senior floating rate bonds issued by Australian banks.
According to our most recent data, the QPON ETF had $761 million of money invested. With QPON’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 Fixed interest – Australia 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 QPON ETF is 0.22%. The issuer, BetaShares, collects this fee automatically.
Meaning, if you invested $2,000 in the QPON ETF for a full year you could expect to pay management fees of around $4.40. 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 QPON Product Disclosure Statement (PDS), available on the ETF issuer’s website, because it will detail the fees, tax implications and the latest information.
Side note: did you know you can access our full review of the QPON ETF by clicking here?
What does the Fidante Partners Limited XARO ETF do?
The ActiveX Ardea XARO Fund provides investors with exposure to an actively managed portfolio of fixed income products, particularly government bonds, while implementing risk management strategies that aim to provide protection from interest rate fluctuations and general market volatility.
With our numbers for Dec 2020, XARO’s FUM stood at $424.21 million. Since the XARO’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 Active ETF (e.g. ETMF) sector should be able to scale well and become profitable for the ETF issuer.
Are the fees for the XARO ETF bad?
Fidante Partners Limited, the ETF issuer, charges a yearly management fee of 0.50% for the XARO ETF. Meaning, if you invested $2,000 for a full 12-month period you could expect to pay a base management fee of around $10.00.
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.
If you want to learn more about the XARO ETF, you should know that you can access our free investment report.