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How to invest in ETFs in Australia in 2024

To buy ETFs in Australia you'll need to sign up to an online broker or investment platform.

Find the cheapest ETF broker Compare ETF brokers

You might have heard that exchange traded funds (ETFs) are great way to invest your money, which explains their growing popularity.

ETFs let you invest in a whole portfolio of stocks, including index funds, and some ETFs even let you invest in alternative assets like bonds, property gold and oil.

Find out what you need to know about these low-cost, easy-access investment products.

How to buy ETFs in Australia (in 5 simple steps)

    1. Choose an ETF broker - you can compare options in the table below.
    2. Sign up to your account – you'll need to provide personal details and proof of ID.
    3. Research which ETF you want to invest in based on your personal goals.
    4. Search for the name or ticker code of the ETF you want and place a buy order.
    5. Track the performance of your ETF.

Watch: How to invest in ETFs

Step 1: Choose an investment account

ETFs are traded on the stock market the same way that stocks are, so to access them you'll need to sign up to a share trading platform or investment app.

The first step is to make sure you choose the right platform for your ETF strategy.

For instance, many ETF investors prefer to invest once or twice a year or less into their ETF. So it makes sense to find a platform that doesn't charge any monthly or ongoing fees.

Other investors might want to invest small amounts regularly. In this case, you may prefer to sign up with a platform that charges a low trade (brokerage) fee. Some ETF brokers will charge $0 brokerage fees and instead charge a monthly fee.

Other options include micro-investment or robo-advice platforms such as Raiz Invest or Stockspot. These typically allow you to invest in a portfolio of multiple ETFs based on your risk profile, and you can typically set up an automated investment option with an amount and frequency of your choosing.

Ultimately, the lower the fees the better, but it is important to match your platform with your needs.

Also read: Australia's best ETF trading platforms

Our top online broker picks

Finder survey: How many ETFs do Australians hold?

Response
119.53%
217.16%
315.38%
512.43%
410.65%
105.33%
63.55%
83.55%
122.37%
72.37%
201.18%
301.18%
91.18%
140.59%
170.59%
190.59%
470.59%
500.59%
650.59%
900.59%
Source: Finder survey by Pure Profile of 1145 Australians, December 2023

Step 2: Sign up to the trading account

Once you've chosen a trading account, you'll need to sign up.

When it comes to signing up with a broker, it is usually free, but some accounts charge inactivity fees.

The registration process takes place online, and if you're a new customer, you'll need to provide your basic information, including the following:

  • Your name, address, date of birth and contact details
  • Your tax file number (TFN)
  • Proof of ID
  • Linked bank account details

Step 3: Research which ETF you want to invest in based on your personal goals

When it comes to any form of investing, it is important to match your goals, risk profile and objectives.

After all, there's no point in taking on more risk than required to achieve your personal goals.

When it comes to an ETF, this is especially true. ETFs are broken up into 2 categories: passive and active. Your financial goals could help determine which one you choose to invest in and what percentage of your portfolio you invest in either one.

If you choose to invest in a passive ETF, the managers will seek to replicate the performance of a broader equity market, sector or trend. Think of the ASX 200 or S&P 500. If you take a passive approach, you'll likely just track this market.

On the other hand, some managers will choose to actively invest. The aim here is to increase returns, but it will generally cost you more in management fees and can come with more risks.

Step 4: Search for the name or ticker code of the ETF you want and place an order to buy the share

Now that you've researched the ETFs you want to own, you need to buy them.

This will require you to search for the specific ticker code of the ETF you want to purchase and then you will need to order it.

When it comes to ordering shares, there are a few options depending on what your broker provides. But generally speaking, you can choose either a limit order or a market order. If you choose a market order, you are looking to purchase as quickly as possible, while a limit order is a predetermined price that you choose.

Step 5: Track the performance of your ETF

Now that you own the ETF, you should track its performance.

After all, it is important that it continues to align with your personal needs and objectives. If it's continuing as you hoped in step 3, you could keep investing in it. If it's underperforming, it might be time to sell.

But it is also important to give the ETF some time for your thesis to play out. Markets can be volatile in the short period, and they might not reflect the long-term potential of the assets you own.

How do ETFs work?

An exchange traded fund is a bundle of shares or options that is listed on a stock exchange that you can purchase through a single trade.

In layman's terms, it is a pooled investment security that typically tracks a market index, a theme, a commodity or other assets. The original ETFs were passive index funds, but over the last decade, the sector has exploded.

An example of an index fund would be the iShares Core S&P/ASX 200 ETF, a market-tracking ETF made up of the 200 biggest companies in Australia. Investors in this ETF own a small percentage of each company based on market weighting. So, larger companies like BHP and Commonwealth Bank make up a larger holding than say a smaller company like Corporate Travel Management.

Each ETF is allocated an ASX code and can be bought and sold by investors the same way that you would buy and sell shares.

The good thing about ETFs is they instantly create a diversified portfolio. By default, you own an entire section of a market, but you can easily add other assets including Australian shares, global shares, fixed income, debt, foreign currencies, commodities and metals.

The main difference between an ETF and a mutual fund is an ETF is listed on an exchange such as the Australian Securities Exchange (ASX).

Types of ETFs

The humble ETF has evolved from its start as a simple passive investing index. Nowadays, you can get an ETF for pretty much anything ranging from your more traditional passive approach to an active strategy, a thematic strategy and everything in between.

Here are the different ETF types you might want to trade:

Passive ETFs

Also known as indexed ETFs or index funds, these funds aim to replicate the returns of a specific index or benchmark. For example, you may want to invest in a fund that tracks the performance of the S&P/ASX 200 (Australian stock market) or the S&P 500 (US stock market).

Active ETFs

Also referred to as exchange traded managed funds (ETMFs), active ETFs aim to outperform the market or a particular index. These sometimes come with a higher level of risk and usually have higher management fees.

Factor and smart beta ETFs

These combine both active and passive strategies. They typically track an index but factor in additional variables, such as a higher weighting of smaller companies. Smart beta ETFs track non-traditional indices designed to invest in a selection of company stocks based on their own set of rules. The idea is to outperform the market.

Structured and synthetic ETFs

Synthetic ETFs are where things start getting a little bit more complex.

ETFs access investment assets in 2 ways: physically or synthetically. ETF issuers of a physical (or standard) ETF have purchased the underlying assets on the index it aims to replicate.

Structured or synthetic ETFs try to replicate the performance of their underlying assets through the use of derivatives. This is because it's not always practical to hold physical assets. For example, gold or commodity ETFs are often synthetic due to the fact that storing large amounts of gold is often difficult. Instead of investing in an actual lump of gold, you're investing in a contract that promises returns based on the commodity's price movements.

What is a derivative?

Derivatives are products that derive their value from underlying assets like commodities or shares. Instead of purchasing a physical asset, it is a contract with an agreed-upon return based on the price of the movements of the underlying asset.

Warning: Because structured products may use complex investment strategies, they can be much riskier than a standard index ETF.

You can read more about synthetic ETFs here.

Commodity ETFs

Commodity ETFs, or exchange traded commodities (ETCs), track the performance of an underlying physical commodity, such as gold, natural resources or agricultural products.

What are the costs of investing in ETFs?

When you invest in an ETF, the first cost you'll be aware of is the ETF unit price. However, there are other less obvious costs you need to be aware of. While ETFs typically charge lower fees than unlisted managed funds, this isn't always the case.

You should always read the PDS provided by the ETF issuer for full details of any fees that apply and how they will affect your investments. Here are the main costs to take note of:

  • Management fees. Just like any other managed fund, ETFs have management fees, which are sometimes referred to as the management expense ratio (MER). This fee is charged by the ETF issuer and is usually included in the unit price.
  • Brokerage fees. You'll need to pay brokerage fees whenever you buy or sell ETF units. These fees vary depending on the online broker you choose but usually start at around $10 or $20.
  • The buy/sell spread. This is the difference between the highest price you're willing to pay for an ETF unit and the lowest price at which a seller is happy to sell. The wider the spread, the more it can cost you.

Are ETFs good for beginners?

Generally speaking, ETFs can be an easy way for beginner investors to start investing. When it comes to ETF trading, they have a few beginner-friendly characteristics, including the following:

  1. You don't have to be hands-on with your investing
  2. If you choose a passive fund, you have diversification in one trade
  3. They take away the problems of portfolio construction
  4. They are low costs
  5. Due to typical lower turnover, they can be tax-efficient

All in all, ETFs can be a simple way to build towards a long-term financial plan. If you're looking for the best ETFs to invest in, click here.

Compare online ETF brokers

ETFs are bought and sold just like regular stocks, so you'll need to choose an online broker before you are able to invest.

Name Product Brokerage on AU ETFs Inactivity fee Asset class
Webull
Exclusive
Webull
$0
$0
ASX shares, Global shares, Options trading, US shares, ETFs
Finder exclusive: Get an additional 30 days of $0 brokerage on stocks. T&Cs apply.
Trade over 3,300 Australian and US ETFs with real $0 brokerage.
CMC Invest
Finder Award
CMC Invest
$0
$0
ASX shares, Global shares, Options trading, US shares, ETFs
$0 brokerage on US, UK, Canadian and Japanese markets (FX spreads apply).
Trade over 45,000 shares and ETFs from Australia and 15 major global markets. Plus, buy Aussie shares or ETFs for $0 brokerage up to $1,000 (First buy order of each security, each day - excludes margin loan settled trades).
Moomoo Share Trading
$3
$0
ASX shares, Global shares, US shares, ETFs
Get 10 free shares + earn 6.8% p.a. on idle cash upon deposit. T&Cs apply.
Trade shares on the ASX, the US markets and buy ETFs with Moomoo. Plus join a community over 20 million investors.
Tiger Brokers
Exclusive
Tiger Brokers
$5.50
$0
ASX shares, Global shares, US shares, ETFs
Finder exclusive: 10 no-brokerage US or ASX market trades in the first 180 days + 7% p.a. on uninvested cash with first deposit of any amount, plus US$30 TSLA + US$30 NVDA shares with deposits up to AU$2000. T&Cs apply.
Trade Australian, US and Asian stocks with no minimum deposit on Tiger Broker’s feature-packed platform.
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Important: The standard brokerage fee displayed is the trade cost for new customers to purchase $1,000 of either Australian or US shares. Where a platform charges different fees for both US and Australian shares we show the lower of the two. Where both CHESS sponsored and custodian shares are offered, we display the cheapest option.

Ask an expert: What are the main benefits of buying an ETF?

ETFs are a great option for those just getting started with investing as they give investors greater visibility to a number of companies and sectors. The stock market can be very intimidating for those just getting started, but ETFs offer diversification that can otherwise often take a long time to build if investing in individual stocks.

There is also generally a cost saving that comes with investing in ETFs as you're able to save on brokerage by buying units of a singular stock as opposed to paying for multiple trades for stock in every company you're interested in. You can also build a diversified portfolio of stocks more quickly – without needing a large amount of money upfront. Investing in ETFs also helps you reduce your risk, as you don't have all your eggs in one basket – or all your money in one company.

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John Winters
Superhero, co-founder

Do ETFs pay dividends?

Some ETFs pay dividends if the underlying company stocks pay dividends. However, it also depends on whether the fund manager chooses to pass this on, so check this first if this is a priority. This information should be available in the ETF's product disclosure statement.

Most of the time, ETFs will pay their dividends on a quarterly basis, though this isn't a rule. If you're interested in ETF dividends, check the yield, how often it's paid and whether you can reinvest the payments back into the ETF if you choose or if it's paid into your account.

How do I compare ETFs?

Like share prices, the price of ETF units can fluctuate day to day. However, many ETFs move up and down in line with the index they are tracking, so there are a few simple tips to keep in mind to help you get more out of your ETF investments:

  • Compare the price. ETF issuers regularly provide net asset value (NAV) information, often in real time. This is commonly referred to as the indicative NAV (or iNAV). By comparing it with the buy and sell (unit) prices quoted by your ETF broker, you can determine whether you will get value for money.
  • Consider limit orders. The iNAV can change quite quickly throughout the day as volatility in underlying markets drives it up or down. If you're investing in a volatile ETF, such as an ETC, it may be safer to place limit orders rather than market orders when buying or selling. This will ensure that you get the price you want.
  • Management fees. All ETFs charge management (MER) fees that are calculated as a percentage of your returns. The average fee is around 0.8% of your funds – make sure the fees match your returns.
  • Markets and sectors. ETFs have different themes. Some ETFs track large stocks from the US while others track small-cap stocks from Australia or specific sectors such as health, tech or renewables.
  • Choose carefully. ETFs come in all shapes and sizes, and carry different levels of risk depending on the type of assets they track. For example, while an ETF focused on resource stocks might offer the potential for higher returns, it also comes with a higher risk attached than an index that tracks the top 200 stocks.

To see our guide on the best performing ETFs, click here.

Pros and cons of ETFs

Pros

  • Index fund investing. Index funds have become a popular way to invest relatively safely in the stock market. Most (not all) ETFs are types of index funds.
  • Diversify your portfolio. Buying units in just 1 ETF allows you to invest in many shares and asset classes at once.
  • Dividend income. If the underlying assets held by an ETF pay dividends, those dividends and franking credits (if applicable) will be passed on to you.
  • Relatively inexpensive. Creating a diversified portfolio of shares and other investment options usually requires a lot of money. But if you invest in ETFs, you can get started with as little as a few hundred dollars at a time or less if you use a micro-investing platform such as CommSec Pocket or Raiz.
  • Easy exit. Unlike some other types of investments that lock you into a contract for a fixed term, ETFs are open-ended meaning they are easy to transact with.

Cons

  • Losing money. If the underlying assets owned by an ETF don't perform as hoped, the value of an ETF will fall – and the value of ETF units you own will fall along with it.
  • Tracking errors. As we mentioned above, ETFs don't always exactly mimic the performance of the index they're designed to track, with fees, taxes and other factors potentially resulting in lower-than-expected returns.
  • Risks associated with individual ETFs. The underlying assets held by your ETF also come with their own risks, depending on what they are tracking.
  • International taxes. If you buy units in an ETF that is listed in a country other than Australia, you may need to pay foreign taxes. Make sure you're aware of all tax implications of an ETF before you commit any funds.

Frequently asked questions

Disclaimer: This information should not be interpreted as an endorsement of futures, stocks, ETFs, CFDs, options or any specific provider, service or offering. It should not be relied upon as investment advice or construed as providing recommendations of any kind. Futures, stocks, ETFs and options trading involves substantial risk of loss and therefore are not appropriate for all investors. Trading CFDs and forex on leverage comes with a higher risk of losing money rapidly. Past performance is not an indication of future results. Consider your own circumstances, and obtain your own advice, before making any trades. Read the Product Disclosure Statement (PDS) and Target Market Determination (TMD) for the product on the provider's website.
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To make sure you get accurate and helpful information, this guide has been edited by Richard Whitten as part of our fact-checking process.
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Written by

Investments analyst

Kylie Purcell is the senior investments editor and analyst at Finder. She has completed a Certificate of Securities and Managed Investments (RG146) and specialises in investment products including online brokers, robo-advisors, stocks and ETFs. See full bio

Kylie's expertise
Kylie has written 153 Finder guides across topics including:
  • Investment strategies
  • Financial platforms
  • Stockbrokers
  • Robo advisors
  • Exchange traded funds (ETFs)
  • Ethical investing
  • ASX stocks
  • Stock and forex markets

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4 Responses

    Default Gravatar
    KathyNovember 1, 2023

    which is the best ETF for gold

      AvatarFinder
      KylieNovember 6, 2023Finder

      Hi Kathy, we can’t recommend any products however the following ASX-listed ETFs are gold-themed: The VanEck Gold Miners ETF, Betashares Global Gold Miners ETF, Global X Physical Gold, VanEck Gold Bullion ETF, Perth Mint Gold ETF, Betashares Gold Bullion ETF. Which you pick depends on your personal goals and circumstances. Remember that some gold-themed ETFs track gold mining companies and other track the price of gold bullion in either AUD or USD.

    Default Gravatar
    AlexanderMay 2, 2023

    are there any Australian Vanguard etfs that pay monthly?

      AvatarFinder
      KylieMay 15, 2023Finder

      Hi Alexander, I’m not aware of any Vanguard ETFs that pay monthly. Distributions are typically paid once a quarter or once a year. However it’s worth reaching out to Vanguard directly to double check this.

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