Constructing the best portfolio consisting of handpicked and well-researched stocks can become very time-consuming. This is where ASX ETF’s come in handy, allowing you to invest in some of the best stocks at very low fee’s compared to cherry-picking your own and paying exuberant brokerage fee’s.

  • What Does ETF ASX Stand For?

    ETF stands for Exchange Traded Fund on the Australian Stock Exchange

  • How To Buy an ASX ETF

    ETF’s are typically purchased through an online broker such as SelfWealth or Commsec

  • What Are the Benefits of an ASX ETF?

    In a single trade, get diversified exposure to number of companies listed on the ASX.

  • What Are The Top 3 ASX ETF Providers

    Vanguard – BetaShares – iShares

What Is An ETF?

By definition an ETF or Exchange Traded Fund (ETF) is a type of security that tracks an index, sector, commodity, or other asset, but which can be purchased or sold on the stock exchange the same as a regular stock.

An ETF is different to a mutual fund in the way that most mutual funds are typically actively managed in an attempt to outperform the index and increase investors profits. ETF’s are typically passively managed, as they track a specific market index.

There are two types of ETF’s Active and Passive. An active ETF is similar to a mutual fund where this is managed by a person, whilst passive aim to replicate an index.

What Are the Most Traded ASX ETF’s?

A list of some of Australia’s largest ETF’s by Assets Under Management (AUM) can be found in the below table:

TickerCompanyMarket Cap
PMGOLDGold Corporation8.3billion
VASVanguard Australian Shares INDEX ETF5billion
STWSPDR S&P/ASX 200 Fund3.6billion
IVVIshares S&P 500 ETF3.1billion
VGSVanguard MSCI INDEX International Shares ETF2.07billion
IOZIshares Core S&P/ASX 200 ETF1.98billion
VTSVanguard US Total Market Shares INDEX ETF1.818billion
AAABetashares Australian High Interest Cash ETF1.75billion
IOOIshares Global 100 ETF1.74billion
Top 10 Listed ETF’s by AUM

What Can I Do with An ETF?

ETF’s sit in your brokerage account like reglular stocks. However there is a lot that can be done with what people typically think as a boring investment. For example take a look at the range of offerings from BetaShares.

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There pretty much an ETF product for nearly anything these days. From shorting the market to investing in a portfolio of the top tech companies and Currencies. There are also Geared funds for those looking to take additional leverage during market conditions.

What are the fee’s of ASX ETF’s

ASX-listed ETF’s can be bought and sold on most standard online brokerage platforms. If you need help getting started with online brokers check out a broker allowing FREE buying and selling of ETF’s. However, it only set’s you back the cost of brokerage to actually buy and sell the ETF, which in most cases is $10-20.

The fee structure of each individual ETF is however different. Some of the low-cost options by Vanguard or Betashares have as low as a 0.07% annual management fee. (A200 is the world’s lowest-cost Australian Shares ETF). You can get started with some ETF products for only $500.

Some ASX Listed ETF products also come with a Distribution Reinvestment Plan attached. If you are interested in learning more about a DRP then check out this article. This allows reinvesting for a very low cost base.

Overtime, lower fees can add up to thousands of extra dollars in your account.

What Type of Returns Can I Expect from an ASX Listed ETF?

Below Is a graph showing the 1-year returns of some common sectors, some ASX listed ETF’s, US Listed Index and a F100 ETF. As you can see tracking the index would have delivered some amazing returns in the single year performance. However the performance from a 5-year is also very exciting.

Source: Trading View

What is ETF Slippage?

Slippage is the amount you can loose by crossing the spread when buying and selling an ETF. It’s calculated by the average percentage difference between the best buyer and seller during market hours. VAS and STW currently have the lowest slippage rates in the Australian Market.

Who Are The Providers of ASX Listed ETF’s?

There are 3 major players in the Exchange Traded Fund Space in the Australian market these are:

Vanguard: Vanguard provides a range of ETF’s from Property, Shares, Fixed Income, Cash, Shares. Vanguard is responsible for the largest ETF in Australia VAS.

BlackRock: – Home of the IOZ ETF, Blackrock iShares provide one of the lowest fee ETF products on the market at a 0.09% fee and paying out their distribution quarterly.

BetaShares: Providing a good quality global and Asia focussed ETF, with some of the lowest fee’s on an Australian Market at 0.07% with a distribution paid quarterly.

Each will have a different fee structure and slightly different product disclosure statements for each of their individual ETF product.

Prophet’s Take

Prophet is a massive fan of ASX Listed ETF’s. Given the track record of the stock market ~7% PA if we assume this continues ETF’s should also continue to perform well. ETF’s won’t necessarily beat the market however, since they are they market, in our opinion they should play an integral part in any personal portfolio’s.

ASX Listed ETF’s Paired with a Dividend Reinvestment Plan and Dollar Cost Averaging is our preferred way to invest in ASX ETF’s. This is an extremely cost effective way to get into the market.

Prophet Invest Holds VAS in their Portfolio.

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