the SPDR S&P/ASX Australian Bond Fund ETF (ASX: BOND) and iShares MSCI Japan ETF (ASX: IJP) are Exchange Traded Funds (ETFs) operating in the Fixed Interest – Australia and International Equity sectors respectively.
How would an investor add BOND to a portfolio?
The name is… the SPDR BOND ETF. BOND invests in investment grade, Australian dollar denominated Australian bonds with maturities greater than one year.
According to our most recent data, the BOND ETF had invested $48.99 million. Since its funds under management (also known as FUM or “market capitalization”) is less than $100 million, you have to consider whether this ETF is still too small and sustainable for the ETF issuer. . AT Best ETFs we say an ETF with more … than $100 million invested is usually more durable than one with less than $100 million (at least). However, there are exceptions to this general rule, particularly if the ETF issuer/provider is reputable and committed to growing the ETF’s FUM through effective marketing strategies and distribution to financial advisors. .
Fees to consider
According to our figures, the annual management fee for the BOND ETF is 0.24%. The issuer, SPDR, collects this commission automatically.
In other words, if you invested $2,000 in the BOND ETF for a full year you could expect to pay a management fee of around $4.80. These fees are different from the fees you pay to your brokerage provider (eg CommSec, NabTrade, SelfWealth, etc.), which is the fee to buy or sell the ETF. In addition to the management fees charged by the issuer, don’t forget to check the “spread” for the ETF.
A comparison of fees
Fees aren’t the only key consideration for ETF investors, but it’s an easy thing to do. To understand if the ETF you are considering is too expensive, compare it with other ETFs in the same sector and with the industry average. For example, the average management fee (MER) of all ETFs covered by the Best Australia ETFs was 0.51%, or $10.20 for every $2,000 invested. Keep in mind that small changes in fees paid can make a big difference after 10 or 20 years. You should read the BOND Product Disclosure Statement (PDS), available on the ETF issuer’s website, as it will detail the fees, tax implications and latest information.
The BOND ETF might be one to add to your watchlist. If you want to access our full ETF review, click here to get our full report – it’s totally free.
Discover the IJP ETF
The iShares IJP ETF offers investors exposure to approximately 85% of the Japanese stock market. This is an inexpensive way to access a specific market through a single fund.
With our December 2021 numbers, IJP’s FUM was $428.15 million. Given that the IJP’s FUM exceeds $100 million, our investment team would say that the ETF satisfied our minimum criteria for the total amount invested, otherwise known as FUM. A very durable ETF in the index business should be able to scale well and become profitable for the ETF issuer.
Are IJP ETF fees bad?
iShares, the issuer of the ETF, charges an annual management fee of 0.47% for the IJP ETF. In other words, if you invested $2,000 for a full 12 month period you can expect to pay a base management fee of around $9.40.
Management fees are above the average of all ETFs in our ASX ETF listbut keep in mind that the ETF may be able to justify the higher price with superior performance over time.
Choosing among ETFs seems too easy to be true: “Pick one and put it in your bottom drawer.” However, it’s important to get it right the first time so you don’t have to cut and change posts (and possibly pay additional taxes). For your convenience, if you’re looking at the IJP ETF, be sure to click here to access our analyst’s investment report. It’s free.