ETFs in Australia: 4 ETFs to consider when starting

This video explains WHAT ETFs are, WHAT you should look for when considering an ETF, some examples of 4 ETFs that cover the broad Australian market and risks you should consider when investing in ETFs. We’ll be talking about popular ETFs from Vanguard, SPDR (State Street), iShares and BetaShares. ETFs are a great way to start you on your passive investing journey.

Quick Links:
00:00 Introduction
00:25 What is an ETF?
01:16 ASX site which has a list of ETPs (ETFs and more)
01:57 What to look for in an ETF
02:43 Comparison of 4 ETFs that cover the Australian market (side by side)
08:09 A few risks associated with investing in ETFs10:00 Additional resources on ETFs

What is an ETF?
ETFs is an Exchange Traded Product that seeks to deliver the return of the relevant index by investing directly in either all of the securities or a representative sample of the securities included in the index or benchmark.
Source: https://www.asx.com.au/products/etf/asset-classes.htm#australian-etps
There are like over 2,000 companies listed on the ASX - so how do you know which one to invest in?!
Instead of buying shares in a single company (which is hard because you don’t really know if they’re going to be ok), you’re buying shares of a fund that has shares in lots of different companies (usually ones that make up like the top 200 or top 300) companies in Australia. So in that way you don’t really have to pick the “potential winners” because you have a stake in all of them.

Go to the ETPs part of the ASX website:
https://www.asx.com.au/products/etf/managed-funds-etp-product-list.htm

One of the first things you’ll see are the “Australian Exposure” section. So this is a list of ETFs that give you exposure to the Australian sharemarket.

What you should look for in an ETF:
*Investment Objective: List out in broad terms what the ETF is about and trying to achieve.
*Index it’s tracking: What index is the ETF pegged to or trying to replicate the returns on.
*Fees: What are the fees and how do they compare to similar ETFs.

Comparison of 4 ETFs that cover the Australian Market:
Vanguard Australian Shares Index ETF (ASX code: VAS)
SPDR S&P/ASX 200 Fund (ASX code: STW)
iShares  Core S&P/ASX 200 ETF (IOZ)
BetaShares Australia 200 ETF (A200)

SOME Risks associated with investing:
Market or sector risk
Currency risk
Liquidity risk

Additional Resources
ASX ETF Course (Australia): https://www.asx.com.au/education/etfs-etcs-course.htm
Money Smart Website (Australian Government website): https://moneysmart.gov.au/managed-funds-and-etfs/exchange-traded-funds-etfs
Investopedia: https://www.investopedia.com/terms/e/etf.asp

Great comparison of IOZ and STW:
https://www.eurekareport.com.au/investment-news/etfs-roadtest-ioz-vs-stw/138993?gclid=CjwKCAjwqJ_1BRBZEiwAv73uwJ_BfwFTKIej8lhasVKMdtXXoj7EKTDTH3MisWaj9bL9w6JEzggZYhoChQAQAvD_BwE

Reserve Bank of Australia document covering equities and their returns:
https://www.rba.gov.au/publications/rdp/2019/2019-04/australian-equity-market-facts-1917-2019.html

Solactive Index interview:
https://www.etfstream.com/feature/6191_interview-solactive-comes-to-australia/

Sound Sources:
Typewriter sound: http://soundbible.com/853-Typewriter-And-Bell.html
Cash Register sound: https://www.freesoundslibrary.com/cash-register-sound-effect/

Disclaimer:
The information provided in this video is general in nature only and does not constitute personal financial advice. You should also consider seeking the advice of an investment advisor who holds an Australian financial services (AFS) licence or is a representative of an AFS licensee. Be sure to work with someone who understands your investment objectives and tolerance for risk. Your investment advisor should understand these products, be able to explain whether or how they fit with your objectives, and be willing to monitor your investment alongside you.

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