One of the best ways to invest into shares is to just invest in a good index and benefit from the long-term growth of the market.
Unless fund managers can provide outperformance after fees over the long-term, or very differentiated returns, I just don’t see the point of being invested with most fund managers.
However, you may also think that an investment like Vanguard MSCI Index International Shares ETF (ASX: VGS) is too diverse and you’re losing investment performance because of it. Here is an exchange-traded fund (ETFs) that could provide the right mix for ASX shares:
BetaShares Australia 200 ETF (ASX: A200)
This might be the cheapest way to invest in the ASX market. This ETF has an annual management fee of only 0.07%, which is even cheaper than what’s on offer from Vanguard Australian Share ETF (ASX: VAS).
With this ETF you get exposure to all the ASX blue chips like Commonwealth Bank of Australia (ASX: CBA), Woolworths Group Ltd (ASX: WOW) and BHP Group Ltd (ASX: BHP), all the way down to number 200 on the list. However, many of these large businesses are very mature.
Aside from the cheap management cost, the other attractive feature of this ETF is that it has an underlying partially franked dividend yield of 4.6%, which is partially due to a higher dividend payout ratio – it has a price/earnings ratio of around 17.75x.
The ASX ETF offers a decent yield, at a decent price / earnings ratio with solid businesses. However, the main issue I have with it is that it’s too focused on financial and resource businesses.
Even so, I wouldn’t want to put too much money in the ASX ETF, I’d want to balance it with plenty of quality ASX dividend shares like these ones.
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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia has recommended 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.