Now could be the right time to run a ruler over Betashares Australian Sustainability Leaders ETF (ASX: FAIR) and SPDR S&P/ASX 200 Listed Property Fund ETF (ASX: SLF). Using our internal quantitative analysis, these ETFs appear to offer good exposure to the Australian shares sector.
What do they do?
The BetaShares FAIR ETF provides exposure to the largest Australian shares and focuses on companies that operate ethically. FAIR has been certified by the Responsible Investment Association Australasia (RIAA), as part of the Responsible Investment Certification Program.
The SLF ETF by SPDR invests in shares/securities of listed real estate investment trusts (REITs). Investors can use these property-focused ETFs to get exposure to a broad basket of trusts and companies exposed to property, including office spaces, commercial rental spaces and construction projects.
To learn more about the FAIR ETF, read our free ETF investment report once you’re done with this article.
To make this article easier to digest, we’ll just study the fees or ‘management expense ratio’. Using data for December 2020, the FAIR ETF has an MER of 0.49% while the SLF ETF had a yearly fee of 0.40%. So, SLF wins on this metric. Keep in mind, a more useful metric to know is the fee quartiles that these ETFs find themselves in (note: quartile 1 is best). Meaning, we take all the Australian shares ETFs in our database and divide them into 4 quartiles, based on their fees. For example, any ETF which has a fee below 0.3% would be considered in our first (best) quartile.
Performance is important.
Performance is important. But it’s not everything — and past performance is not indicative of future performance. Indeed, it’s just one part of a much bigger picture. The reason we say performance is not everything is because of the volatility of financial markets and the economy from one year to the next. Some ETFs and fund can put in a compelling return one year just to generate poor returns the next time around.
That’s why we prefer three-year or seven-year track records over one-year track records. It can smooth out the temporary performances caused by external factors. both ETFs have achieved our three-year performance hurdle. As of December 2020, the FAIR ETF had an average annual return of 9.75%. During the same time, the SLF ETF returned 5.49%.
Lastly, we need to consider the issuer or provider of the ETF. There are too many factors that go into our internal scoring of fund providers to detail here (you’d get bored pretty quickly). So here’s the quick version. As you guessed, the issuer of the SLF ETF is SPDR. SPDR ranks highly for our scores of ETF providers and issuers in Australia. We think SPDR is one of Australia’s top 10 ETF providers for advisers and institutions, and its ETFs on the ASX provides good exposure to particular financial markets for retail investors.
In summary, the FAIR ETF rates well for our internal scoring methodology but not by much.
Please, keep in mind, there is much more to picking a good ETF. That’s why you should go now and use these skills to find the best ETF you can. If you want the name of our team’s top ETF pick for 2021, keep reading…