BEST AUSTRALIAN SHARE ETFs

GOLD WINNERS ISHARES, SPDR, VANECK AND VANGUARD

These are ideal for investors who want low costs, diversification and transparency

The gold winners – iShares Core S&P/ASX 200, SPDR S&P/ASX 200, VanEck Vectors Australian Equal Weight and Vanguard Australian Shares

Index – benefited from a solid year in the sharemarket.

Three of them track the Australian market perfectly, with iShares and SPDR holding the top 200 shares and Vanguard covering more mid-cap stocks by following the top 300. These broadly diversified index trackers are good building blocks for any investor’s portfolio.

Funds that invest in Australian shares enjoy the benefits of dividend-paying companies and franking credits.

iShares and Vanguard paid out 3.99% and 4.29% respectively to the end of September 2017, while the SPDR dividend was around 4.38% to the end of October 2017.

They are popular because they are straightforward, plain vanilla index ETFs. The SPDR fund, the longest standing ETF listed on the ASX with a 16-year history, has attracted $3.4 billion in funds while the Vanguard version, launched eight years ago, has $2.4 billion and iShares has $723 million. Portfolio turnover is low, which keeps capital gains tax down for investors.

But a big reason they hold so much appeal is their low cost: 0.15%pa for iShares, 0.19% for SPDR and 0.14% for Vanguard.

The VanEck fund isn’t a pure index ETF but is rules based. It tracks the 60 largest and most liquid ASX-listed companies across all sectors, weighing them equally. An equal-weighting approach is designed to reduce concentration risk in sectors such as financials and resources because it is indifferent to market capitalisation. The fund yielded 3% to the end of September 2017. It charges a fee of 0.35%.