Why it might be time to put the GOVT ETF to your watchlist

If you’re on the hunt for exposure to the Fixed interest – Australia sector, it could be worth adding the SPDR S&P/ASX Australian Government Bond Fund ETF (ASX: GOVT) to your ASX watchlist. Let’s take a closer look at this SPDR ETF.

What is the GOVT ETF used for?

The GOVT ETF by SPDR invests in Australian Government bonds issued by the Commonwealth/Federal Government, State Governments (Semis) and territories.
If there is a dividend/distribution to be paid by the ETF throughout the year, it’s likely to be on a quarterly basis.

Keep an eye on FUM

The SPDR GOVT ETF had $29.1 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 SPDR, 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.

Fees and costs for investors

SPDR charges investors a yearly management fee of 0.22% for the GOVT ETF. This means that if you invested $2,000 in GOVT for a full year, you could expect to pay management fees of around $4.40.

For context, the average management fee (MER) of all ETFs covered by Best ETFs Australia on our complete list of ASX ETFs is 0.51% or around $10.20 per $2,000 invested. Keep in mind, small changes in fees can make a big difference after 10 or 20 years.

Summary

These are just some of the considerations or factors you would need to look at when weighing up the GOVT ETF. Before doing anything, take a look at our SPDR GOVT report – it’s free. While you’re at it, don’t forget to search our complete list of ASX ETFs.

[ls_content_block id=”4954″ para=”paragraphs”]

$50,000 per year in passive income from shares? Yes, please!

With interest rates UP, now could be one of the best times to start earning passive income from a portfolio. Imagine earning 4%, 5% — or more — in dividend passive income from the best shares, LICs, or ETFs… it’s like magic.

So how do the best investors do it?

Chief Investment Officer Owen Rask has just released his brand new passive income report. Owen has outlined 10 of his favourite ETFs and shares to watch, his rules for passive income investing, why he would buy ETFs before LICs and more.

You can INSTANTLY access Owen’s report, and 24/7 access to the Rask community, for FREE by CLICKING HERE NOW or the button below.

Unsubscribe anytime. Read our TermsFinancial Services GuidePrivacy Policy. We’ll never sell your email address. Our company is Australian owned.

Information warning: The information on this website is published by The Rask Group Pty Ltd (ABN: 36 622 810 995) is limited to factual information or (at most) general financial advice only. That means, the information and advice does not take into account your objectives, financial situation or needs. It is not specific to you, your needs, goals or objectives. Because of that, you should consider if the advice is appropriate to you and your needs, before acting on the information. If you don’t know what your needs are, you should consult a trusted and licensed financial adviser who can provide you with personal financial product advice. In addition, you should obtain and read the product disclosure statement (PDS) before making a decision to acquire a financial product. Please read our Terms and Conditions and Financial Services Guide before using this website. The Rask Group Pty Ltd is a Corporate Authorised Representative (#1280930) of AFSL #383169.