You might be sitting back and considering the VanEck Vectors Australian Subordinated Debt ETF (ASX: SUBD) and thinking that January could be as good of a time as any to take closer look. Here’s how we would start our research.
Find out what the ETF does
The VanEck SUBD ETF invests in a portfolio of Australian dollar-denominated subordinated bonds from a range of banks and insurance companies.
Investors could use the SUBD ETF to diversify an existing equities portfolio and gain exposure to subordinated debt, or to create a regular income stream from the monthly distributions offered by this ETF.
SUBD’s FUM meets our hurdle
The VanEck SUBD ETF had $228.24 million of money invested when we last pulled the monthly numbers. Given SUBD’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 Fixed interest – Australia sector because we believe that relative to smaller ETFs, achieving this amount of FUM de-risks the ETF.
Pay attention to yearly costs & fees
VanEck charges investors a yearly management fee of 0.29% for the SUBD ETF. This means that if you invested $2,000 in SUBD for a full year, you could expect to pay management fees of around $5.80.
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.
Our takeaway
If you’re thinking about investing in SUBD, bear in mind that this is just an introductory glance at the ETF. To explore further, check out our free VanEck SUBD report. And for good measure, search our complete list of ASX ETFs for similar ETFs in the Fixed interest – Australia sector to do a good comparison.
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