If you’re looking for an ETF in the International fixed interest sector, the BetaShares Sustainability leaders Diversified Bond ETF – Currency Hedged ETF (ASX: GBND) is probably an option you’re considering.
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How investors can use the GBND ETF
The BetaShares GBND ETF provides investors with exposure to a portfolio of fixed-rate, investment-grade global and Australian bonds, with a significant allocation to “green bonds” which are issued to directly fund projects that have positive environmental and/or climate benefits.
The GBND ETF is sub-scale
As at the end of last month, the GBND ETF had $52.33 million of money invested, commonly known as FUM or ‘market cap’.
Our team says that an ETF with more than $100 million invested is more sustainable than one with less than $100 million (at least) because if an ETF stays too small for too long it may not be sustainable for an ETF issuer. However, there are exceptions to my rule of thumb, especially if the ETF issuer/provider (i.e. BetaShares) is committed to growing the ETF’s FUM to the point where it becomes profitable.
GBND ETF fees & costs
With a yearly management fee of 0.49% charged by BetaShares, chuck $2,000 into GBND for a full year and you will pay management fees of around $9.80.
For comparison, the average yearly management fee (MER) of all ETFs covered by Best ETFs Australia on the complete list of ASX ETFs is 0.54% or around $10.80 per $2,000 invested. However, for a better comparison be sure to compare like-for-like. That is, compare GBND alongside other fixed income ETFs like Vanguard VIF ETF
(ASX: VIF), which is priced at 0.28%.
In addition to a yearly management fee, there are other costs investors must consider, including brokerage and taxes. A specific cost for ETF and mFund investors to consider is the buy-sell spread, which is the ‘invisible’ cost paid by an investor when he or she buys or sells the ETF.
For the GBND ETF, the most recent average monthly buy-sell spread (April 2020) was 0.8%. Remember, the lower (or ‘tighter’) the buy-sell spread, the better. This buy-sell spread was above the average ETF spread of 0.51%, which means the GBND ETF has more slippage than the average ETF (that’s a bad thing).
Takeaway
This is a quick intro to the GBND ETF. If you’re weighing it up, take a look at all fees and costs, know your exposure limits and seek expert advice if you need it.
If you’re looking for free reports on every single Australian ETF, there’s only one place to go: www.bestetfs.com.au. It’s our purpose-built mFund and ETF website and it’s 100% free.
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