Co-author – Dominic Beattie
What is an ETF?
Exchange traded funds, or ETFs, are pooled investment products designed to track an index through a carefully selected portfolio of securities. As their name suggests, ETFs can be traded on a stock exchange like shares. A typical ETF is a passive investment, however some providers offer active ETFs that are actively managed by a professional fund manager.
Related article: Active Vs. Passive Investing – What’s The Difference?
ETF Providers in Australia
An Australian manager of ETFs, covering Australian and international equities, cash, currencies, commodities and alternative strategies. BetaShares is a member of one of Asia’s largest asset management firms, the Mirae Asset Global Investments Group. BetaShares offers 46 ETFs covering Australian equities, international equities, currencies, commodities, fixed income and active exposures. As of March 2018, BetaShares’s total funds under management was $4.5 billion, making them the fourth largest ETF issuer in Australia.
BlackRock Investment Management (iShares):
A large global investment firm with over 135 investment teams in more than 30 countries. Their iShares range of products includes 28 different ETFs over five exposures – Australian equities, international equities, Australian cash, Australian fixed income & international fixed income. As of March 2018, BlackRock’s total funds under management was $10.5 billion (a 33% increase over the last 12 months), making them the largest ETF issuer in Australia.
ETF Securities Limited:
A global investment firm offering a comprehensive range of specialist exchange traded products. They consider themselves to be pioneers in specialist investments, having launched the world’s first gold exchange traded commodity. They dominate the commodities ETF sector with over 50% of funds under management – the rest shared between Perth Mint Gold and BetaShares. There are two types of commodity ETFs, synthetic or physical. Synthetic ETFs differ from physically backed ETFs, because they hold financial contracts instead of the physical underlying commodities. Commodities ETFs should be marked as synthetic, if this is the case. In total, ETF Securities Limited offer 14 ETFs specialising in commodities, currency, Australian equities and international equities. As of March 2018, their total funds under management was $975 million.
Related article: Which ETFs Have the Highest Return on Investment?
Gold Corporation (Perth Mint):
Precious metal provider trading as The Perth Mint has an ETF that tracks the price of gold. They are one of the smallest providers, with total funds under management of $134 million, as of March 2018.
Magellan is an owned subsidiary of Magellan Financial Group, which is a top 100 ASX-listed company. Magellan has offices in Australia, New Zealand and the US, and a team of 28 investment professional managers. They focus on global equity and infrastructure strategies for clients based around the work. They offer three ASX-listed active ETFs which invest in 20 to 40 global stocks and have total funds under management of $1.2 billion, as of March 2018.
The table below displays a snapshot of online share trading platforms on Canstar’s database for ‘casual investors’. Please note that these results are based on an average of 2 trades per month, are ordered by star rating and then by providers’ name alphabetically.
Van Eck Australia (Market Vectors):
Van Eck Australia – a subsidiary of the New York-based Van Eck Global. Their Market Vectors range of ETFs includes 16 different products specialising in Australian equities, international equities, Australian fixed income and one in international commodities (gold miners). As of March 2018, their total funds under management was $1.6 billion, a whopping 126% increase over the last 12 months.
Russell Investment Management:
A global investment firm with offices in Sydney and Melbourne, offering five different ETFs on the ASX. Their ETFs cover two exposures – Australian equities (including a responsible investment ETF) and fixed income & cash. As of March 2018, Russell Investment Management’s total funds under management was $642 million.
Schroders is a global asset management company with offices in 29 countries across Europe, the Americas, Asia and the Middle East. Schroder offers just one ETF in Australia, the Schrolder’s Real Return Fund. This is a multi-asset active ETF available on the ASX with total funds under management of $46 million, as of March 2018.
Related article: Why You Might Consider investing In Active ETFs
State Street Global Advisors (SPDR):
Investment management arm of State Street Corporation – an American global financial services holding company, with an office in Sydney. Offers 19 ETFs on the ASX under the SPDR product range covering Australian equities, international equities, fixed income & cash and factor investing. As of March 2018, SPDR’s total funds under management was $5.5 billion, making them the third largest issuer in Australia.
Headquartered in Zurich and Basel, the UBS Group is a global wealth management firm with more than 61,000 employees worldwide. They offer nine different ETFs covering fixed income & cash, and Australian and international equities. UBS are a major provider of ethical ETFs, offering six different funds which deliberately exclude tobacco and ‘controversial weapons’ out of their portfolios. As of March 2018, they had $270 million in total funds under management.
Vanguard Investments Australia:
Vanguard is a global investment firm headquartered in Pennsylvania (USA) with more than 16,600 employees worldwide. Offers 24 different ETFs on the ASX covering Australian equities, property, international equities and fixed income & cash exposures. As of March 2018, they had $10.2 billion in total funds under management, making them the second largest issuer in Australia.
Before you invest
ETFs are considered by ASIC to be complex financial product, with some more complex and risky than others. Before investing, you should consider if an ETF is the right fit for your portfolio, and determine if this financial product suits your investment goals and needs.
*Total funds under management is based on data from March 2018 and provided by Stockspot.