For investors who want broad exposure to Australian shares without picking individual stocks, ASX exchange-traded funds (ETFs) have become the go-to solution.
Among the most widely held are three familiar tickers: Vanguard Australian Shares ETF (ASX: VAS), BetaShares Australia 200 ETF (ASX: A200), and iShares Core S&P/ASX 200 ETF (ASX: IOZ).
They look similar on the surface, but each has a slightly different focus and appeal depending on what kind of investor you are.
VAS: The broad, all-rounder
Vanguard Australian Shares ETF is often the first ETF investors encounter â and for good reason. It tracks the S&P/ASX 300 Index (ASX: XKO), giving exposure to around 300 of the largest Australian-listed companies. That makes it the most diversified of the three.
The ASX ETF is heavily weighted toward financials and resources. It has big positions in Commonwealth Bank of Australia (ASX: CBA), BHP Group Ltd (ASX: BHP), CSL Ltd (ASX: CSL), National Australia Bank Ltd (ASX: NAB), and Westpac Banking Corp (ASX: WBC). Because it reaches beyond the top 200 stocks, VAS also includes a meaningful slice of mid-caps. They can add a touch of growth over the long term.
VAS is attractive to investors who want a true “own the market” approach. It’s often used as a core holding, particularly for long-term and income-focused portfolios. It pays regular dividends largely funded by bank and mining dividends.
A200: Low cost, big names
BetaShares Australia 200 has surged in popularity thanks to one key differentiator: cost. The ASX ETF tracks the S&P/ASX 200 Index (ASX: XJO), like iShares Core S&P/ASX 200 ETF, but with one of the lowest management fees available in Australia.
The fund focuses on the country’s 200 largest companies. That means it’s slightly more concentrated than VAS and excludes smaller mid-cap names. Its largest holdings overlap heavily with VAS. Think Commonwealth Bank, BHP, CSL, ANZ Group Holdings Ltd (ASX: ANZ), and Macquarie Group Ltd (ASX: MQG), but without the long tail of smaller stocks.
A200 appeals to cost-conscious investors who believe fees matter over the long run. If your goal is simple, low-cost exposure to Australia’s biggest and most liquid companies, this ASX ETF is hard to ignore.
IOZ: The established core option
This ASX ETF is one of the longest-standing Australian equity ETFs and also tracks the ASX 200. iShares Core S&P/ASX 200 ETF sits somewhere between VAS and A200 in terms of approach. It offers broad large-cap exposure with a competitive – though not the lowest – fee.
Like A200, IOZ is dominated by banks, miners, and healthcare giants. Investors get exposure to Australia’s dividend-heavy blue chips. That makes it popular with income seekers and SMSFs looking for simplicity and reliability.
IOZ’s appeal lies in its track record and issuer reputation. It’s often chosen by investors who want a no-frills, set-and-forget ETF from a well-established provider.
Foolish Takeaway
VAS suits investors wanting the broadest exposure to the Australian market. A200 is ideal for those focused on minimising fees while sticking to large caps.
The third ASX ETF, IOZ, offers a proven, straightforward way to access Australia’s biggest companies. None are better in isolation. The right choice depends on whether you value diversification, cost, or simplicity most.
The post 3 most popular ASX ETFs focused on Aussie shares appeared first on The Motley Fool Australia.
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Motley Fool contributor Marc Van Dinther has positions in BHP Group. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended CSL and Macquarie Group. The Motley Fool Australia has positions in and has recommended Macquarie Group. The Motley Fool Australia has recommended BHP Group and CSL. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.