At the current price the BetaShares FTSE 100 ETF (ASX: F100) could be the best value ETF to buy today.
What Is The BetaShares FTSE 100 ETF (ASX: F100)?
There are some exchange traded funds (ETFs) that exist to track the returns of an index, which is a pre-made list of shares. You’ve probably heard of Standard & Poor’s (S&P) which is responsible for putting together the list of some of the world’s most well known indices like the S&P 500 or the ASX 200.
The Financial Times Stock Exchange 100 Index (FTSE 100) is a share index of the biggest 100 shares on the London Stock Exchange. The index is maintained by the FTSE Group, which is a subsidiary of the London Stock Exchange.
What Are Some Of The Shares In the FTSE 100?
The London Stock Exchange is home to some of the world’s biggest and oldest businesses. You won’t find many tech giants on there, but there are plenty of industry heavyweights.
There’s global bank HSBC, energy giants Royal Dutch Shell and BP, pharmaceutical heavyweights Astrazeneca and GlaxoSmithKline, alcohol juggernaut Diageo, British American Tobacco, consumer companies Unilever and Reckitt Benckiser, telco Vodafone and plenty of other large shares.
So although these businesses are listed in London, they make their profits from many countries around the world.
Why Is The BetaShares FTSE 100 ETF A Good Opportunity?
Investors have been getting nervous about what Brexit is going to mean for the UK economy, which has sent the price/earnings ratio for the index down to 12, which is very low for a western economy’s share market. ‘Cheap’ is hard to find these days on share markets. Yet, the earnings of the big businesses like BP, Unilever and so on aren’t going to be affected as much as shares outside of the FTSE 100 – so UK shares could be unnecessarily good value.
The consequence of the low valuation has also boosted the dividend yield. UK businesses pay a generous dividend, so the ETF has an underlying dividend yield of just over 5%.
Another good reason to think about BetaShares FTSE 100 ETF is that it’s diversified. The UK share market offers businesses very different to the ASX, and you get 100 in just one purchase.
Summary
I think this ETF could be one of the best value to consider, particularly if Brexit doesn’t end in a no deal. You’d certainly be taking on the risk of Brexit and investor sentiment about Brexit. It could be worth considering as part of a diversification strategy, particular for alternative income.
Another ETF that could be worth considering for dividends and long term growth is in the free report below.
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