The SPDR S&P/ASX 200 (ASX: STW) is a popular exchange traded fund (ETF), so it’s natural that potential investors have questions. Here is an overview on STW and answers to three top questions.
According to the ETF provider, STW was the very first exchange traded fund listed in Australia. It listed in August 2001.
What is SPDR S&P ASX 200?
The SPDR S&P ASX 200, or STW as the ticker name (which is much less of a mouthful), tracks the S&P/ASX 200 Index. This means that it provides an investor exposure to 200 of the largest businesses on the ASX.
Its current top 10 holdings are Commonwealth Bank of Australia (ASX: CBA), CSL Limited (ASX: CSL), BHP Group Ltd (ASX: BHP), Westpac Banking Corp (ASX: WBC), National Australia Bank Ltd (ASX: NAB), Australia and New Zealand Banking Group Ltd (ASX: ANZ), Wesfarmers Ltd (ASX: WES), Macquarie Group Ltd (ASX: MQG), Woolworths Group Ltd (ASX: WOW) and Telstra Corporation Ltd (ASX: TLS).
The ASX 200 is known for being weighted towards the financials (banks) and materials (mining) sectors. Because STW tracks the ASX 200, it is also weighted towards those two sectors with financials making up 31.07% of the portfolio and materials being 17.22%.
STW has a management fee of 0.13% which means if $5,000 was invested for one year, it would attract a fee of $6.50. This is on the low side for ETF fees and is quite reasonable. It’s always important to consider fees for any potential investment.
Does STW pay dividends?
STW does pay a dividend with a yield of 3.51% at the time of writing. It pays dividends quarterly in January, April, July and October each year.
ETF distributions are known to fluctuate due to the fact that ETFs have to rebalance their holdings. Any profits crystalized during the rebalancing has to be paid to investors as dividends.
Does STW have a DRP?
Yes, STW does have a dividend reinvestment plan (DRP).
If an investor wants to activate a DRP for a share or ETF listed on the ASX, it can be done through the relevant share registry company. For STW, the share registry company is Link Market Services.
Final thoughts on STW
This is a solid choice for an investor who wants to capture the ASX200 with instant diversification and low fees.
I think it is worth noting that BetaShares Australia 200 ETF (ASX: A200) tracks an almost identical index, called Solactive Australia 200 Index. It might be useful to compare STW and BetaShares A200, as the management fee for the A200 ETF is only 0.07%.
It is an interesting investing fact to know that STW was the first ETF listed on the Australian stock exchange, something I’ll keep up my sleeve for financial small talk.
I wouldn’t have STW as a sole investment, however I believe it would make a good choice in a portfolio in addition to other complimentary ETFs.
