World’s lowest-cost Australian shares ETF to launch on ASX

Posted: 6 April 2018 11:03 am
ASX 450

The BetaShares Australia 200 ETF (A200) will have a low management fee of just 0.07%.

Leading provider of exchange traded funds (ETFs) BetaShares has today announced it will launch the world's lowest-cost Australian shares ETF on the Australian Securities Exchange (ASX) this month. The BetaShares Australia 200 ETF will trade under the code A200.

The ETF will give investors easy exposure to the biggest companies in Australia, tracking the 200 largest ASX listed companies by market capitalisation. As well as offering instant diversification of Australian equities, the ETF boasts a tiny management fee of just 0.07%. In comparison, the current lowest-cost Australian shares ETF listed on the ASX has a management fee of 0.14%.

CEO of BetaShares Alex Vynokur said A200 will be a game-changer for the Australian wealth-management industry, saying, "A200 will significantly reduce the cost of ownership of a diversified portfolio of Australian shares, making it an attractive solution for both institutional and retail investors."

Unlike traditional managed funds including listed investment companies, ETFs don't aim to outperform the market by actively picking stocks, but rather they track a particular index to simply mirror its performance. "As a retail investor, what is your chance of picking the market? What's more important first and foremost is being invested in the market. Traditional managed funds are expensive to invest in, but ETFs really simplify investing. ETFs are by their very nature well-diversified," said Vynokur when I spoke with him last month.

ETFs are becoming increasingly popular among Australian retail investors for their easy access to a large number of shares, their instant diversification and their low cost. A report released in March by BetaShares and Investment Trends revealed the number of ETF investors grew by 18% in the past 12 months alone, with 72% of current ETF investors saying diversification is the main reason they use ETFs.

"We are experiencing significant growth in demand from retail investors, institutional investors and financial advisers for cost-effective investment solutions across a range of asset classes and strategies. While product innovation in the Australian ETF market has delivered a broad choice of investment options available on the ASX and put the Australian ETF industry on a strong growth trajectory, we believe that greater availability of simple, low cost portfolio building blocks will help drive the next wave of ETF industry growth," he said.

The new A200 ETF is expected to begin trading on the ASX later this month, subject to regulatory approval.

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