BetaShares Australia 200 ETF (ASX: A200) could be a really good starting investment for people beginning their investment journey.
The A200 ETF is an exchange-traded fund (ETF) which gives people the ability to invest in the ASX 200 (ASX: XJO), which effectively represents most of the ASX share market.
Why could A200 ETF be a good starting place for beginner investors?
It can be really tricky knowing where to start investing on the ASX share market. There are literally thousands of different potential investments to choose from.
Do you go for one of the biggest businesses in Australia like Commonwealth Bank of Australia (ASX: CBA), BHP Group Ltd (ASX: BHP) and Telstra Corporation Ltd (ASX: TLS)?
What about somewhat smaller businesses with more growth potential like Adore Beauty Group Ltd (ASX: ABY), Pushpay Holdings Ltd (ASX: PPH) and Temple & Webster Group Ltd (ASX: TPW)?
It might be easier just to look at ETFs which allow us to invest in lots businesses at once. We can buy a portfolio of businesses in a single investment.
Which ASX shares are in the ETF’s portfolio?
BetaShares Australia 200 ETF aims to track the ASX 200. So, the biggest ASX businesses are the biggest positions.
For example, CBA is 8.8% of the portfolio, CSL Limited (ASX: CSL) is 6.9%), BHP is 5.4%, Westpac Banking Corp (ASX: WBC) is 4.5%, National Australia Bank Ltd (ASX: NAB) is 4.4%, Australia and New Zealand Banking Group Ltd (ASX: ANZ) is 3.8%, Wesfarmers Ltd (ASX: WES) is 3.1%, Macquarie Group Ltd (ASX: MQG) is 3%), Woolworths Group Ltd (ASX: WOW) is 2.4% and Telstra is 2.3%.
Those are the biggest ten positions. It goes all the way down to the smallest of the 200 – such as St Barbara Ltd (ASX: SBM), Ramelius Resources Limited (ASX: RMS) and Platinum Asset Management Ltd (ASX: PTM).
The ability to get that much diversification in one investment is very useful. Investors don’t have to worry about how much of each investment to own, the ETF automatically does it. Investors get the returns of whatever the ASX 200 does, less a management fee.
Very low costs
Costs can make a big difference over a lifetime of investing.
A200 has the lowest fees when it comes to investing in ASX 200 shares. The annual management fee is 0.07% of the fund value per year. That’s extremely low. To put it in context, a typical fund manager may charge 1% of the investment each year.
The lower the fees, the better.
Final thoughts on A200 ETF
I think it’s a really good starting place. The one thing with this investment is that the businesses which influence the ETF’s returns, like CBA and Westpac, seemingly don’t have a lot of compound growth potential because of how big they already are in the Australian (and New Zealand) market.
However, there are other options out there like Vanguard Msci Index International Shares ETF (ASX: VAS) which provide exposure to growthier names like Apple, Microsoft and Alphabet (Google) which could provide more capital growth over time.
For investors are interested in finding other ETFs then a good place to look for free information and articles is Best ETFs, which is part of the Rask umbrella and has a lot of good (and free) resources.
