The iShares Global High Yield Bond (AUD Hedged) ETF (ASX: IHHY) could be one to watch in July and in this short article, we’ll run through arguably the three most important factors to consider when you’re reviewing an ASX ETF.
What the iShares IHHY ETF actually does
The iShares IHHY ETF provides investors with exposure to the performance of high-yield corporate bonds across global markets and sectors, hedged into Australian dollars. This is a simple way to get exposure to high-yield corporate bonds across global developed markets in a single fund.
Below $100m in FUM
The iShares IHHY ETF had $77.02 million of money invested when we last pulled the monthly numbers. With a funds under management (FUM) or ‘market cap’ figure of less than $100 million, it’s important to consider if this ETF is still too small.
We say an ETF with more than $100 million invested is typically more sustainable than one with less than $100 million (at least). This is because if an ETF is too small, it may not be sustainable for an ETF issuer/provider, such as iShares, to continue to operate it.
That said, there are exceptions to this rule of thumb, especially if the ETF issuer is committed to growing the ETF’s FUM to the point where it becomes profitable.
Don’t forget IHHY’s fees
iShares charges investors a yearly management fee of 0.56% for the IHHY ETF. This means that if you invested $2,000 in IHHY for a full year, you could expect to pay management fees of around $11.20.
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.
What to do next
If you’re weighing up investing in the IHHY ETF, keep in mind that this is just a brief introduction. Indeed, before doing anything, take a look at our free iShares IHHY report. And while you’re at it, consider searching our complete list of ASX ETFs for similar ETFs in the Fixed interest – International sector to compare your options.