BetaShares ASX A200 (ASX:A200) ETF review

Betashares ASX 200 ETF review from an experienced and long term index investor.

Betashares ASX A200 Review

Betashares A200 ETF aims to track the Solactive Australia 200 index, that is the top 200 Australian publicly traded companies by market cap.

The Good

  • Lowest MER of all Australian index funds at 0.07%
  • Does not contain derivatives
  • Pays a strong dividend
  • Dividend comes with franking credits
  • High liquidity – easy to buy or sell shares

The Bad

  • Run by a for-profit company (Betashares) as opposed to a not-for-profit company (Vanguard)
  • Doesn’t contain small caps
  • High dividend yield might not be tax effective in the accumulation phase for those approaching FIRE with high incomes

Verdict: In the debate of A200 vs VAS, I choose to invest in A200 through Pearler.

pearler

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The details

Betashares A200 was founded on the following benefits;

Low Cost – management costs of .07% p.a, the lowest cost Australian shares available on the ASX

Portfolio Diversification – in a single ASX trade, investors gain exposure to the largest 200 companies listed on the ASX

Physically backed – funds hold physical securities that comprise the index – no derivatives used for index tracking

Transparent – portfolio holdings, value of the funds assets and net asset value per unit available daily on the BetaShares website

Liquidity – available to trade on the ASX like any share

BetaShares
Betashares A200

A200 invests in accordance with the Solactive 200 Index of Australian shares. This is slightly different to the S&P ASX 300 index, in that it does not include companies from 201-300 on the index. Due to the higher weighting by market cap of financials and materials (mining) in the index, this is shown in A200’s sector allocation above. A200 also invests heavily in healthcare, industrials and real estate which are all huge parts of the Australian economy.

Betashares, A200

A200 has its top 10 holdings in Commonwealth Bank, CSL construction Limited and BHP, reflecting the sector allocation as per the index. The top 5 exposures make up just over 30% of the portfolio, and the top 10 making up 44.5%. These blue chips that make up a higher percentage of the portfolio are good, stable earners which typically produce strong dividends.

Performance

A200 has produced a 4.56% dividend yield in the year ending 31 August 2019, which I think is pretty good. For an investor following a Thornhill style dividend investing approach, this allows you to safely draw on your portfolio using the 4% rule from dividends alone (no need to sell any parcel of shares – not that that is a bad thing), plus surplus to reinvest into future shares. The Capital value of the share price of A200 will also steadily track the index, and should expect to see growth as per the index over time

Betashares
Performance since A200 listed (source BetaShares August quarterly report)
Betashares A200
Capital share price fluctiation of A200 (source BetaShares)

Why I own A200

I own A200 because I can’t be bothered buying individual stocks. It takes too much time to value them and keep track of them all. It makes sense to buy an index fund, and ETFs for me are a massive win.I know I want to invest in the Australian Index, and I know I want to do this through both ETFs and LICs.

For me, when LICs are not looking favourable, or if there is a massive drop in the price of the ETF, then I will be choosing the ETF. A200 with its rock bottom .07% annual management expense ratio means choosing it is a no brainer.

BetaShares A200 is really leading the way with ultra low fee ETFs, and it can be seen in their massive growth that investors are voting with their feet and choosing the low cost alternative. And I will too, in line with my investment strategy of course.

Should I buy A200 or VAS?

Similar to the discussion between US ETFs VTS (Vanguard) and IVV (BlackRock iShares), there is a choice to be made in the Australian market between the Vanguard offering VAS and the Betashares offering A200. VAS historically had twice the management fee of A200, but given they recently reduced this to a MER of.10% makes it more attractive.

A200 is still over a third cheaper in terms of management fees, but I like the idea of splitting my funds across two ETFs, both in terms of “diversification” and to make sure I can buy whatever has gone down the most. I also like that I am choosing both ETFs which each track a slightly different index: VAS: S&P ASX 300 index vs A200: Solactive 200 index.

Summary

A200 is an attractive, ultra low fee Aussie ETF. It gives exposure to the top 200 Australian publicly traded companies, and passes on all dividends straight to the shareholders, and capital growth of its portfolio is reflected in the growing A200 share price. I will hold A200 for a long time to come, and enjoy the benefits of a diversified Aussie share portfolio in one simple to manage ETF. I think its well suited for someone on the path to FI. What about you?

Epilogue: I sold my VAS (Vanguard Australian shares) ETF and rolled the balance into Betashares A200 fund. This was because The management fee was cheaper with A200 than it was with VAS, and ultimately Fees are the only thing I can control – I can’t control the market!

Frequently Asked questions about Betashares ASX A200 ETF

Answers to frequently asked questions about the Betashares ASX A200 Exchange Traded Fund

What is the A200 management fee?

The Betashares ASX A200 ETF has a management fee of 7 basis points, or 0.07% per annum. On a $10,000 investment, this amounts to $7 per year. This is incredibly cheap and is the lowest of all Australian ETFs.

What is the ASX A200 dividend yield?

The Betashares ASX A200 ETF has had an annualised dividend yield of 4% (plus franking credits) according to Sharesight.

Further viewing: Betashares A200 ETF

BetaShares A200 ETF introduction
eBusiness Institute review
pearler review
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4 thoughts on “BetaShares ASX A200 (ASX:A200) ETF review

  1. Love your work Captain FI, but wouldn’t you be subject to capital gains tax when you sold your VAS to roll over into A200?

    1. Hey Jamie, absolutely right if you had capital gains. When I sold my VAS shares, they had actually made a small loss due to the market downturn. Since VAS and A200 are pretty much the same thing in my mind, the market being down didn’t matter because as soon as I got out of one, I was instantly in the other one. To be honest though, it doesn’t really make much of a difference at all and much bigger gains are made by cutting your spending a bit. But because I was overthinking it and being pedantic, A200 is technically the lower management fee haha

      1. Fair enough captain, I assumed that you had a capital gain (never assume!!!), when in fact you had a capital loss. So yeah, if you can make a swap for essentially the same product but with a lower management fee – why not! I probably would have done the same. Cheers mate, and keep up the good work 👍

        1. Thanks Jamie, not the best outcome having a capital loss but convenient timing to tinker hey! Although moving forward, my main goals are to diversify my holdings a bit more away from just A200 and so I am looking to bolster the VTS and VEU holdings, as well as any good Aussie LICs when they pop up below value.

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