Best ETF match-up: QUAL Vs. IHCB

Could now be your opportunity to place the iShares Core Global Corporate Bond (AUD Hedged) ETF (ASX: IHCB) and the VanEck Vectors MSCI World Ex-Australia Quality ETF (ASX: QUAL) on your ASX investing watchlist?

Why do investors own the iShares Core Global Corporate Bond (AUD Hedged) ETF?

The iShares IHCB ETF provides investors with access to the performance of investment-grade corporate bonds across global markets and sectors, hedged into Australian dollars. This is a relatively low-cost way to get exposure to global investment-grade corporate bonds in a single fund.

According to our most recent data, the IHCB ETF had $310.97 million of money invested. With IHCB’s total funds under management (FUM) figure over $100 million, the ETF meets our team’s minimum investment criteria for FUM levels. As a general rule, our team draws the line at $100 million for ETFs in the Fixed interest – International sector because we believe that, relative to smaller ETFs, achieving this amount of FUM lowers the chance that the ETF issuer will close the ETF.

Fees to consider

According to our numbers, the annual management fee on the IHCB ETF is 0.0026. The issuer, iShares, collects this fee automatically.

Meaning, if you invested $2,000 in the IHCB ETF for a full year you could expect to pay management fees of around $5.20. This fee is different from the fee you pay to your brokerage provider (e.g. CommSec, NabTrade, SelfWealth, etc.), which is the fee to buy or sell the ETF. In addition to a management fee charged by the issuer, be mindful to check the ‘spread‘ for the ETF.

A fee comparison

Fees aren’t the only key consideration for ETF investors, but it’s an easy thing to do. To understand if the ETF you’re looking at is too costly, compare it with other ETFs from the same sector, and against the industry average. For example, the average management fee (MER) across all of the ETFs covered by the Best ETFs Australia team was 0.51%, which is $10.20 per $2,000 invested. Keep in mind that small changes in the fees paid can make a big difference after 10 or 20 years. You should read the IHCB Product Disclosure Statement (PDS), available on the ETF issuer’s website, because it will detail the fees, tax implications and the latest information.

Don’t stop here, to get our full IHCB ETF review, click through to this ETF review page now.

VanEck Vectors MSCI World Ex-Australia Quality ETF

The VanEck QUAL ETF gives investors exposure to large companies from developed countries around the world, excluding Australia.

With our numbers for December 2021, QUAL’s FUM stood at $2831.33 million. Since the QUAL’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 Quality factor sector should be able to scale well and become profitable for the ETF issuer.

A look at the QUAL ETF fee load?

VanEck, the ETF issuer, charges a yearly management fee of 0.004 for the QUAL ETF. Meaning, if you invest $2,000 for a full year from now you can expect to pay a management fee of around $8.00.

This management fee is below the average for all ETFs on our Best ETFs Australia list of ETFs. However, you might still be able to find a cheaper ETF for less.

To discover more facts about the QUAL ETF, read our free ETF investment report.

So how can you actually invest the QUAL ETF? By getting a free brokerage account with Pearler. If you join Pearler in the month of May 2022, with your free Pearler account you can buy the QUAL ETF and pay $0 in brokerage fees. All you have to do is buy and hold the ETF for 12 months.

You can invest as little as $500 in the QUAL ETF to take-up this offer. Sounds pretty good, right? To invest in QUAL for $0 brokerage, simply click here to visit Pearler’s website and sign up.

$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 — or get it emailed to you — for FREE by CLICKING HERE NOW or the button below.

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