There are a few quick reasons why I like BetaShares Australia 200 ETF (ASX: A200).
You may have already guessed that A200 is invested in 200 Australian businesses. That means it offers a good amount of diversification. The biggest positions in the ETF are the biggest in the ASX 200 – which is what the ETF is essentially tracking.
Its largest holdings are businesses like CSL Limited (ASX: CSL), BHP Group Ltd (ASX: BHP) and Commonwealth Bank of Australia (ASX: CBA).
Other similar ETFs
It’s not the only ETF that looks to essentially track the returns of the ASX. There are other examples like Vanguard Australian Shares Index ETF (ASX: VAS) and iShares Core S&P/ASX 200 ETF (ASX: IOZ).
How has the ETF performed?
COVID-19 caused a lot of difficulties for some of A200’s biggest holdings. Particularly the big four ASX banks like Westpac Banking Corp (ASX: WBC) and National Australia Bank Ltd (ASX: NAB).
Including dividends, A200 has seen a negative return of -5.38% over the past year and a positive return of 3.76% per year since inception on 7 May 2020.
Why I like it
There are three reasons.
First, it offers good diversification. Owning a piece of 200 businesses is a lot better diversification than a portfolio of just four big banks, Telstra and perhaps a miner or two.
Second, it’s very cheap. It has an annual management fee of just 0.07%, which is the cheapest that Aussie investors can get.
Third, it may have a relatively large dividend yield once COVID-19 impacts pass. ASX shares are known for being big dividend payers.