Exchange-traded funds (ETFs) have grown explosively over the past decade or 2 to become a mainstream way of investing in ASX shares (as well as other assets).
In a different manner to share investing, ETF investors pay special attention to an ETF’s underlying market capitalisation. That’s because an ETF with a small volume of funds under management (FUM) generally has a higher chance of being wound-up, or else encountering other issues like slippage. An ETF’s market cap doesn’t represent the value of the underlying securities, but the value of the capital invested in it.
As such, many investors see an advantage in going with a provider that offers the largest FUM base for the chosen asset class that investor wants exposure to.
So to meet this end, here are the largest 10 ETFs trading on the ASX today, listed in descending order of market capitalisation. The data comes from Commonwealth Bank of Australia (ASX: CBA)’s CommSec brokering platform.
The 10 most popular ETFs on the ASX
ASX ETF |
Market Capitalisation |
|
Vanguard Australian Shares Index ETF (ASX: VAS) |
$5.83 billion |
|
SPDR S&P/ASX 200 ETF (ASX: STW) |
$3.62 billion |
|
iShares S&P 500 ETF (ASX: IVV) |
$3.3 billion |
|
iShares Core S&P/SAX 200 ETF (ASX: IOZ) |
$2.95 billion |
|
Vanguard MSCI Index International Shares ETF (ASX: VGS) |
$2.25 billion |
|
BetaShares Australian High Interest Cash ETF (ASX: AAA) |
$2.15 billion |
|
Vanguard U.S. Total Market Shares Index ETF (ASX: VTS) |
$1.92 billion |
|
iShares Global 100 ETF (ASX: IOO) |
$1.83 billion |
|
Vanguard Australian Property Securities Index ETF(ASX: VAP) |
$1.66 billion |
|
Vanguard All-World ex-U.S. Shares Index ETF (ASX: VEU) |
$1.59 billion |
What does this ETF table tell us?
It’s no surprise that the top 2 funds are market-wide ASX index funds. These funds are popular for passive investing into every share in either the S&P/ASX 200 Index (ASX: XJO) — or the S&P/ASX 300 Index (ASX: XKO) in VAS’s case. If an investor is looking for simple, easy exposure to Australian shares, then these funds are a cheap and easy choice.
We also have a couple of US-focused ETFs as well in IVV and VTS. The US markets are especially popular for ASX investors as well as it has always been a safe and rewarding country to invest in. And with globe-dominating companies like Apple Inc (NASDAQ: AAPL) and Amazon.com Inc (NASDAQ: AMZN) at the top of these funds, it’s not hard to understand why.
VGS, VEU and IOO are also popular, with these ETFs providing an avenue for access to international shares outside the US. VEU excludes US companies entirely, while IOO and VGS blends companies like Apple and Amazon with other international giants like Nestle and Unilever.
Finally, we have 2 sector-specific ETFs with AAA and VAP. AAA is a cash-only ETF that invests in cash deposits and pays out dividend distributions every month. VAP instead tracks an index of REITs (real estate investment trusts) like Scentre Group (ASX: SCG) that are traded on the ASX and are a popular choice for income investors.
Foolish takeaway
Whilst an ETF’s size isn’t normally a deciding factor for most ASX investors, it’s still useful (and interesting, in my view) to see which funds, assets, and sectors attract the most interest.
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John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Amazon and Apple and recommends the following options: short January 2022 $1940 calls on Amazon and long January 2022 $1920 calls on Amazon. The Motley Fool Australia has recommended Amazon, Apple, and Vanguard MSCI Index International Shares ETF. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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