Looking to invest in Australian shares ETFs? The Vanguard Australian Shares Index ETF (ASX: VAS) and Betashares Australia 200 ETF (ASX: A200) are two of the most popular choices on the market. Here’s what you need to know.
Betashares A200 ETF
The Betashares A200 ETF provides exposure to the largest companies on the ASX, based on market capitalisation. Instead of an index by the ‘usual suspects’, being MSCI or S&P, the A200 ETF follows the Solactive Australia 200 Index.
This is essentially the same thing as the S&P/ASX 200 (ASX: XJO) since it also uses a market capitalisation weighting — meaning, the biggest ASX shares like CSL (ASX: CSL) and Commonwealth Bank of Australia (ASX: CBA) account for the largest part of the ETF.
As at the end of May, the A200 ETF had over $700 million of money invested (FUM) and the spread was pretty tight, which is a good thing. On top of that, A200’s management fee, which is taken out automatically by BetaShares, was a low 0.07% per year.
Alongside VAS (see below), this is one of the lowest-cost ASX ETFs. For some context, the average management fee (MER) across all of the ETFs covered by Best ETFs Australia is 0.5%, which is around $10 per $2,000 invested.
Want to learn more about the A200 ETF? Click here to access a free investment report.
Vanguard VAS ETF
The Vanguard VAS ETF provides exposure to the largest 300 Australian shares, based on market capitalisation. So there are around 100 more shares included compared to A200. However, keep in mind the shares between the top 200 and 300 largest (i.e. the smallest 100 inside the ETF) make up a pretty small part of the ETF’s weighting. That explains why the performance of the A200 and VAS ETFs, at 17.2% and 17.7%, respectively, have been pretty consistent.
At the end of May 2020, VAS’s FUM stood at $5.2 billion, so it’s a very established and stable ETF, which we like. Vanguard charges a yearly MER of 0.1% for the VAS ETF, so on $2,000, it’s about a 60-cents per year difference compared to A200. In other words, pricing is pretty consistent!
If you’re weighing up the VAS or A200 ETF in a diversified portfolio, consider searching the full ETF list to compare fees and costs side-by-side.
All things considered, I think both of these ETFs would be a good way for newer and established investors to get some exposure to Australian shares.
Disclosure: At the time of publishing, Owen owns shares/units of the BetaShares A200 ETF.