Set and forget Index Fund

In by Natalie P1 Comment

Natalie P

Hi there

I want to set up a set and forget index strategy where I invest say $500 of my pay each month into an Index which tracks the ASX 300.

I am a newbie here – What I am coming to learn is there is a difference between and Index and an Index ETF like VAS which is an Index but an ETF at the same time (0.10% mgmt fees).

Firstly If I am thinking it am 100% sure others are also.

(1) What is the difference between an Index and an Idex that’s also and ETF (Mind exploded) (Please give tiker examples)
(2) What is an example of just an Index which can only be traded once a day (I get that part) that I could research as part of my set and forget strategy.

Thank guys love your work!!

  • Edit
    Jack Strudwicke

    An ETF can follow a sector or an index. So you can buy a gold ETF which buys gold miners only.

    A ETF which tracks the ASX 200 buys all the companies in the ASX in proportion to the weighting of the index.

    There are also even weighted ETF which claim that they should put perform as they buy more of the index which is undervalued and less which is over valued.

    Another option is a LIC. In general they have very low management fees and more or less follow the index. AFIC is the largest on the ASX. MLT, ARG, or BKI are also large, conservative and low fees.

    LIC are actively managed. Hence I wouldn’t venture from those above unless you are willing to do abit more research. The benefit is they tend to have a higher dividend yield than the market and fully franked dividends which is very attractive if you are a low income earner.

    An ETF has many earnings which are off shore and hence do not have 100% franking (I believe around 80% is typical).