Here are the names of three of the best Australian ASX share ETFs:
- Vanguard Australian Shares ETF (ASX: VAS)
- BetaShares Australia A200 ETF (ASX: A200)
- iShares Core S&P/ASX 200 ETF (ASX: IOZ)
What Are Australian Share ETFs?
At a yearly management cost (MER) of just 0.10% it’ll cost you just $2 per year in management fees to get exposure to Australian shares with the VAS ASX ETF. The Vanguard VAS ETF provides exposure to the largest 300 Australian shares, based on market capitalisation.
VAS is issued and operated by Vanguard Australia, which is one of Australia’s largest ETF providers, both by number of ETFs and total money invested (called ‘funds under management’). Part of the global Vanguard Group Inc, Vanguard’s history dates back to the mid-1970s.
What’s great about owning a Vanguard ETF like VAS is that the organisation actually wants to lower fees — not increase them. In 2019, Vanguard lowered the management fees for VAS.
At a ridiculously low yearly management fee of just 0.07%, investing in the A200 ETF is — as far as we know — the lowest cost exposure to Australia’s largest blue shares. Excluding brokerage costs, of course, it’d cost just $1.40 per $2,000 invested. We labelled the BetaShares’ A200 ETF as a ‘game-changer‘ because the ETF is really taking the fight to low-cost incumbents like Vanguard and iShares.
The Betashares A200 ETF provides exposure to the largest 200 Australian shares, based on market capitalisation but it uses a shares index provided by Solactive — not the usual S&P 200 index.
BetaShares is one of Australia’s largest ETF issuers, by number of ETFs issued on the ASX. At the end of 2018, Betashares had $6.1 billion of money invested across all of its ETFs. To learn more about the A200 ETF click here.
Costing just $3 per year in management fees per $2,000 invested, the iShares IOZ Australian shares ETF provides a pure index fund exposure to the largest 200 shares on Australia’s stock market. The ‘core’ name of IOZ hints that it might be best used as a core position in a diversified portfolio, much like the other ETFs in this list.
With one investment, the iShares Core S&P/ASX 200 ETF could be used by investors to get exposure to a broad basket of Australia’s largest public companies. These companies are likely to pay dividends (often with franking credits) and grow in value over the long run (10+ years).
Blackrock is the company responsible for the huge issuer of ETFs called iShares. In fact, it is one of Australia’s and the world’s largest ETF issuers, both in terms of the number of ETFs issued and the money invested.
Which Australian Shares ETF Should I Choose?
Buying and choosing one ETF might sound daunting but we think that so long as you choose from a list of reputable ETF providers (like those above) your chances of making a mistake are pretty low. Having said that we strongly encourage you to take our free ETF investing masterclass course so you know what to look for.
To be clear, investing in shares is high risk and ETFs have specific risks. Read the ETF’s Product Disclosure Statement (PDS) available on the provider’s website or click the links above to understand some of the risks we identified for each ETF listed here.
Disclosure: At the time of publishing, Owen owns shares/units of the A200 ETF.