Unpacking The BetaShares F100 ETF

There are some ETFs that exist to track the returns of an index, which is a pre-made list of shares. You’ve probably heard of Standard & Poor’s (S&P), a financial services company that is responsible for composing some of the world’s most well known indices like the S&P 500 and the ASX 200.

The Rask Finance video below explains the ASX 200 in more detail:

The F100 ETF seeks to track the performance of the Financial Times Stock Exchange 100 Index (FTSE 100), which is an index of the largest 100 shares on the London Stock Exchange by market capitalisation. The index is maintained by the FTSE Group, a subsidiary of the London Stock Exchange.

What Shares Are In the FTSE 100 Index?

The London Stock Exchange is home to some of the world’s biggest and oldest businesses. You won’t find many tech giants on there, but there are plenty of industry heavyweights.

For example, there is global bank HSBC, consumer heavyweights Unilever and Reckitt Benckiser, energy giants BP and Royal Dutch Shell, worldwide telco Vodafone, and plenty of other big name companies.

So, although these businesses are listed on the London Stock Exchange, they are making their profits from many countries around the world.

Why Could The F100 ETF Be A Good Opportunity?

Investors have been getting nervous about what Brexit is going to mean for the UK economy. In turn, this has sent the price/earnings ratio (click here to learn what the P/E ratio is) for the index down to 12, which is very low for a western economy’s share market.

‘Cheap’ is hard to find these days on sharemarkets. Yet, the earnings of the big businesses in the index like BP, Unilever and so on aren’t going to be affected as much as shares outside of the FTSE 100 – so, UK shares could be unnecessarily good value.

The consequence of the seemingly low valuation of this ETF has also boosted the dividend yield. UK businesses typically pay a generous dividend, so the F100 ETF has an underlying dividend yield of just over 5%.

Another good reason to consider the BetaShares FTSE 100 ETF is that it is diversified. The UK sharemarket offers businesses very different to the ASX, and you get 100 of these businesses in just one purchase.

My Take

I think F100 could be one of the best value ETFs to consider, particularly if Brexit doesn’t end in a no deal. However, be mindful that you’d certainly be taking on the risk of Brexit, as well as risk surrounding investor sentiment about Brexit.

Nonetheless, the F100 ETF could be worth considering as part of a diversification strategy, particularly for alternative income.

Another ETF that could be worth considering for dividends and long-term growth is profiled in the free report below.

Disclaimer: At the time of publishing, Jaz has no financial interest in any of the companies mentioned.