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Hi.
Just a query, besides the annual management fee and the buy in 0.05% spread and exchange rate risk and the risk of DB defaulting on this ETFs….
Is this ETF considered a clear-cut interest earning product?
Thanks for ur guidance!
Replyhi Ryan,
Yes, but don’t forget to factor in your brokerage costs as well. This will add about another 0.6% to your cost.
Replyhi,
i have the same queries like toby(above), but in addition of that,
the spreads for the ETFs is awfully wide, why is that so?
– i understand for the 5SG$, it should have a spread big enough for the exchange rate. But why does such a big spread exist for 5AU$?
Buy 185.29AUD, SELL 185.39. (The spread is almost 0.05%)
And, is it a FACT that the value of the ETF will rise 4.45%p.a overnight? Which means if it is priced @ 185.29AUD tonight,
tomorrow it will be at (4.45%/365) more, like 185.31AUD?
Still, the spread will mean that at least the first few days of holding this ETF will go to paying the spread. Am i right to say that?
ReplyHi Ryan,
I think a spread of 0.05% is reasonable. If you look at most stocks, the min spread is 1 cents, which can be 0.5% (or more) of the price.
If more investors start buying/selling this ETF, then the spread might become smaller.
The overnight rate might change daily so the change in daily price will also depend on the prevailing rate.
Replyhi,
so this index is almost like a deposit? i mean the cash rate seems higher than most AUD fixed deposit rates offered here so doesn’t that make it slightly more attractive especially it could be more liquid (barring spreads on the exchange)?
thnks,
toby
hi
Thanks for the info. Please enlighten how I can buy this Aust ETF in Singapore using US$. Will the US$ be first converted to S$ then to A$ ?
thanks
Sean
You can buy the US$ version so no conversion is needed.
http://www.sgx.com/wps/portal/marketplace/mp-en/prices_indices_statistics/securities/etfs
Look at DBXT AUDMM 5US$
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