Under The Hood: Welcome to another in the series, “Under the Hood,” where we delve deep into the world of Exchange Traded Funds (ETFs). This series, supported by Betashares, is designed to help you understand and analyse the vast range of ETFs available in the market.
Today, we’re focusing on the Betashares Australia 200 ETF (ASX: A200), an ETF known for its ultra-low cost and diversified exposure to the top 200 companies listed on the ASX.
The name of this ETF tells us a lot about it. ‘Betashares’ is the product issuer, ‘Australia’ signifies that it invests in Australian companies, and ‘200’ indicates that it targets the top 200 companies.
To understand more about A200, we head to the issuer’s website, the best resource for information on any ETF. Here, we find details about its purpose, the index it tracks, its fees, performance, and top holdings.
A200’s purpose is clear: it aims to track the performance of an index comprising 200 of the largest companies by market capitalisation listed on the ASX. However, it’s important to note that A200 doesn’t track the S&P ASX 200, as you might expect. Instead, it follows the Solactive Australia 200 Index.
The difference between these two indexes? That’s a topic for another day, but for now, let’s focus on the fact that A200 offers a diversified exposure to the top 200 companies listed on the ASX in a single trade. This makes it an ideal long-term, core holding for any portfolio.
Now, let’s talk about fees. A200 boasts the lowest fees for an Australian shares ETF at just 0.04% p.a. That’s only $4 for every $10,000 invested. In February 2023, Betashares almost halved it from the previous 0.07% p.a., making it even more cost-effective.
Why are low fees so important when building a long-term portfolio? Well, over time, even small fees can eat into your returns. The lower the fees, the more of your money stays invested and continues to grow. To see the impact of fees on your investments, check out the MoneySmart Managed Funds Fee Calculator.
In our episode titled “ETFs for Beginners: Basics 101 w/ Betashares”, we discussed the basics of ETFs. If you’re new to investing, ETFs like A200 can be a great way to start. They offer diversification, which can help reduce risk, and they’re easy to buy and sell on the ASX.
In the upcoming episode titled “Basics: WTF is an ETF? ETF 101 Betashares”, we’ll continue our exploration of Betashares’ core funds range. These funds are designed to be the building blocks of your portfolio, providing cost-effective core allocations to a range of asset classes.
So, whether you’re a seasoned investor or just starting out, ETFs, like the Betashares Australia 200 ETF (ASX: A200), could be a valuable tool to consider. They offer a simple, low-cost way to gain diversified exposure to a range of companies. As always, it’s important to do your own research and consider your personal financial situation before making any investment decisions.