Search by ticker code:
Generic filters

Search by ticker code:
Generic filters

Search by ticker code:
Generic filters

Is The iShares Edge AUMF ETF Really Worth It?

The iShares Edge MSCI Australia Multifactor ETF (ASX: AUMF) is coming up on three years listed on the ASX. Here’s a review of how it has performed and what the outlook could be.

About ETFs

Exchange-traded funds, or ETFs, are investment funds that are listed on a securities exchange and provide exposure to a range of shares or assets with a single purchase. The video below explains ETFs in more detail.

iShares AUMF ETF

The iShares Edge MSCI Australia Multifactor ETF uses a rules-based strategy to seek outperformance over the long-term. The fund targets four main drivers of returns: quality, value, size, and momentum.

In a little more detail, the AUMF fund looks for companies with healthy balance sheets that are cheap relative to fundamentals, smaller in size and moving in an upward direction.

At face value, this appears to have been an effective strategy, returning 14.88% over the last 12 months and 13.28% per year since inception in October 2016.

However, there is more to the story.

ETF Breakdown

AUMF has 98 holdings and, looking at the factsheet, you’ll find that the largest holdings are far from being the small, nimble companies mentioned in the strategy.

The largest three holdings are Commonwealth Bank of Australia (ASX: CBA), BHP Group Ltd (ASX: BHP) and CSL Ltd (ASX: CSL). While these are great companies, they’re also among the largest companies in Australia and don’t seem to match the strategy.

In fact, all of the top 10 holdings are in the ASX 200 and have market capitalisations of more than $7 billion.

In terms of sectors, financials is the largest (27.53%) followed by materials (21.24%) and real estate (13.23%). At this point, this might be starting to sound familiar because these are very similar companies and weightings to what you’d expect in an ASX 200 ETF.

AUMF Versus IOZ

This is where I become somewhat cautious about this ETF. The iShares Core S&P/ASX 200 ETF (ASX: IOZ) invests in a lot of the same companies and weights a lot of sectors similarly. However, IOZ has 200 holdings (better diversification) and a management fee of 0.09% versus 0.3% for AUMF.

Even looking at the last two calendar years, you can see the similarities. AUMF returned 15.38% in 2017 and lost 3.41% in 2018, while IOZ returned 11.6% in 2017 and lost 3.01% in 2018.

My Take

AUMF tries to outperform by using certain growth factors, but in reality, it quite closely mimics an ASX 200 ETF but with higher risks. While the returns may be slightly higher, so are the fees and AUMF would possibly fare worse in a downturn.

If you don’t mind extra risk for a slightly higher return, this ETF could work for you, but I wouldn’t pair it with an ASX 200 ETF, and I don’t think it’s the best option for a risk-averse investor.

I’d rather invest in our number one ETF pick in the free report below.

[ls_content_block id=”14948″ para=”paragraphs”]

Disclosure: At the time of writing, Max does not own shares in any of the companies mentioned.

$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.

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.

Skip to content