I think the BetaShares FTSE 100 ETF (ASX: F100) could be the best exchange-traded fund (ETF) to buy for growth and dividends today.
This ETF represents the 100 largest businesses that are listed on the London Stock Exchange. You’d have to be living under a rock to not know that the UK is going through a Brexit process at the moment, which has severely dampened investor confidence about UK shares.
However, many of the shares in the FTSE 100 are global businesses that just happen to be listed in the UK. It’s not as though shares like BP, Diageo, Unilever and Royal Dutch Shell are purely British businesses.
There are plenty of large businesses on the London Stock Exchange that are quite different to a typical ASX business like Astrazeneca, GlaxoSmithKline, British American Tobacco, Vodafone (a telco that operates in many countries, not just one market like our telcos), Reckitt Benckiser, National Grid and BAE Systems. These are all high quality businesses, with most of them having global earnings.
In the month to September 2019, the ETF made a return after fees of around 4% as prospects improved. If a Brexit deal can be made with the EU I wouldn’t be surprised to see UK share prices jump.
The ETF is not the cheapest one around with an annual management fee of 0.45%, but it’s cheaper than most of the Australian actively managed funds.
UK shares pay a decent dividend and with the ETF’s p/e ratio falling to 12.5x its dividend yield has been pushed up to almost 5%. How often can you buy a basket of large, quality businesses at such a low price offering a good dividend yield when interest rates are so low? Some currency diversification may be a good idea as well.
ETFs can be used smartly in a portfolio along with shares that are expected to deliver solid returns over the long-term like these top stock ideas.
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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. 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.