Here’s how we think about the ILC and OZR ETFs
The iShares ILC ETF provides exposure to the largest 20 Australian stocks, giving you targeted exposure to Australian blue-chip companies. This is a low-cost way to access top Australian companies through a single fund.
The SPDR OZR ETF invests in resources companies from within the ASX 200 and aims to track the S&P/ASX 200 Resources Index.
Get our team’s ILC ETF review, available free when you click this link: access the free investment report.
ASX: ILC or ASX: OZR performance
To make this article easier to digest, we’ll just study the fees or ‘management expense ratio’ (MER). Using data for July 2022, the ILC ETF has an MER of 0.24% while the OZR ETF had a yearly fee of 0.34%. As a result, ILC comes out on top. Keep in mind, a more beneficial metric to know is the fee quartiles that these ETFs find themselves in (note: quartile 1 is best). Meaning, we take all the Australian shares ETFs in our database and split them into 4 quartiles, based on their fees. For example, any ETF which has a fee below 0.3% would be considered in our first (best) quartile.
As Jerry Maguire said, ‘show me the money’. Keep in mind, performance isn’t everything — and past performance is not indicative of future performance. It’s just one part of a much bigger picture. The reason we say performance is not everything is because of volatility of financial markets and the economy from one year to the next. Some ETFs and funds can put in a positive return one year just to generate inferior returns the next time around. That’s why we prefer three-year or seven-year track records over one-year track records. It can smooth out the temporary performances caused by external factors. Both ETFs have achieved our three-year performance hurdle. As of July 2022, the ILC ETF had an average annual return of 7.00%. During the same time, the OZR ETF returned 9.34%.
For us, the ILC ETF ranks fairly better for our internal scoring methodology but not by much.
We hope this article helped you analyse ETFs. Don’t forget, there’s a lot more to investing well than what we just outlined (risks, diversification, other potentially better ETFs, etc.). Our analyst team at Rask Australia spends months looking at new ASX investments (it’s our day job!). To make your life easier, you can get the name of our team’s top ETF pick for 2023 in a free report. Keep reading to find out how to get our analyst’s report emailed to you right now…