About a year ago I purchased a number of units in Betashares S&P 500 Yield Maximiser ETF (UMAX) to give my SMSF extra global exposure. This fund has a management charge of 0.79%, which in hindsight seems a bit high. It was only yesterday that I looked at the portfolio holdings which appears to consist of approximately 80% iShares Core S&P 500 ETF with the remainder in US dollars.
This appears to be iShares ticker code IVV, which has a management charge of 0.04%. Would you be able to tell me I am correct and if so, should I sell UMAX and buy IVV?
A: Yes, UMAX does hold about 97% IVV (which only charges 0.04% in management fees), however, it writes call options on the IVV it holds to generate additional income (this is part of its strategy).
But, this can be a flawed concept, as demonstrated by UMAX’s dreadful performance record, underperforming by almost 6% pa since inception:
Fund Returns After Fees (%)
|Fund||S&P 500 Index (TR, A$)|
|3 year p.a||5.56%||13.85%|
|5 year p.a||6.66%||12.35%|
|Since inception (p.a)||9.30%||15.28%|
* As at 29 May 2020