Some things you should know about the BOND ETF
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 $48.73 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.
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The ILB ETF – a quick look for savvy investors
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 December 2020, ILB’s FUM stood at $252.91 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.
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.
The iShares ILB ETF might be one idea for the watchlist but before you go any further, click here to get our full ETF review – it’s free.