Investing your money to get exposure to the Australian shares sector has never been easier thanks to ASX ETFs like the Betashares Geared Australian Equity Fund (Hedge Fund) ETF (ASX: GEAR). Before you make an investment, we think it’s important to do your own ETF review. So, here are three tips to get the ball rolling.
1. Find out what the GEAR ETF invests in
BetaShares GEAR Fund is an internally geared fund, investing in the largest 200 companies on the ASX, by market capitalisation.
2. Has the ETF reached scale?
The Betashares GEAR ETF had $271.04 million of money invested when we last pulled the monthly numbers. Given GEAR’s total funds under management (FUM) figure is over $100 million, the ETF has met our minimum criteria for the total amount of money invested, otherwise known as FUM. We draw 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 de-risks the ETF.
3. Watch the fees (and other costs)
Betashares charges investors a yearly management fee of 0.80% for the GEAR ETF. This means that if you invested $2,000 in GEAR for a full year, you could expect to pay management fees of around $16.00.
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.
Where to from here in 2020?
So there you have it, three tips to weigh up the GEAR ETF. Before you go any further, take a look at our Betashares GEAR report – it’s free. Then, to make sure you’ve covered all bases, don’t forget to search our complete list of ASX ETFs to compare your options. You can filter the search results according to sector, issuer, size and more.