Australia's cheapest ETF - BetaShares takes on Vanguard


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It is the cheapest way to buy into the top 200 Australian companies.

For a fee of 0.07% a year, you can buy into a new exchange traded fund (ETF) from BetaShares - the BetaShares Australia 200 ETF - which will trade on the ASX under the code A200.

This means that for every $10,000 invested, you pay a rock-bottom fee of just $7. (If you bought an actively managed Australian equity fund, your fee would be around 1.1% or $110 for every $10,000.) On top of the ETF's fee you pay brokerage.

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BetaShares points out that the fund's management cost is half that of the current lowest-fee Australian shares ETF available on the ASX, the Vanguard Australian Shares Index Fund, which charges 0.14%pa.

The index for the fund is based on market capitalisation and provided by Solactive, which is the index provider for many other BetaShares ETFs.

BetaShares recently celebrated reaching $5 billion in assets under management in its range of ETFs.

Alex Vynokur, BetaShares' chief executive officer, says there is a growing demand for ETFs from institutions such as large superannuation funds, as well as from retail investors. He estimates BetaShares currently has 20% of the Australia's $36 billion ETF market.

"We believe that greater availability of simple, low-cost portfolio building blocks will help drive the next wave of ETF industry growth," he says.

"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."

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Susan has been a finance journalist for more than 30 years, beginning at the Australian Financial Review before moving to the Sydney Morning Herald. She edited a superannuation magazine, Superfunds, for the Association of Superannuation Funds of Australia, and writes regularly on superannuation and managed funds. She's also author of the best-selling book Women and Money.