Exchange traded funds (ETFs) are a low cost, tried-and-tested way to grow your wealth.
17% of Australians have invested in ETFs at some point.1
ETFs let you invest in a whole portfolio of stocks, including index funds, or even alternative assets like bonds, property, gold and oil.
How to buy ETFs in Australia (in 5 simple steps)
Ready to buy an ETF? Great, you can follow the quick steps below you get started.
Otherwise, read on for more detailed instructions on how to go about choosing and buying an ETF.
Choose an ETF broker You can compare options in the table below. Look out for competitive fees and how many markets are available to trade.
Create a trading account You'll need to provide personal details and proof of ID when creating an account with your chosen investing platform.
Do your research There's no one-size-fits-all ETF. You'll need to find one that matches your personal goals.
Buy the ETF Search for the name or ticker code of the ETF you want and place a buy order.
Track the performance of your ETF ETFs are long-term investments but it's important to make sure your investments stay aligned to your overall goals.
Step 1: Choose an ETF trading platform
ETFs are traded on the stock market the same way that stocks are, so to access them you'll need to sign up to a share trading platform or investment app.
The first step is to make sure you choose the right platform for your ETF strategy.
For instance, many ETF investors prefer to invest once or twice a year or less into their ETF. So it makes sense to find a platform that doesn't charge any monthly or ongoing fees.
Other investors might want to invest small amounts regularly. In this case, you may prefer to sign up with a platform that charges a low trading (brokerage) fee. Some ETF brokers will charge $0 brokerage fees and instead charge a monthly fee.
Other options include micro-investment or robo-advice platforms such as Raiz Invest or Spaceship. These typically allow you to invest in a portfolio of multiple ETFs based on your risk profile, and you can typically set up an automated investment option where you choose how much and how often you invest.
Ultimately, the lower the fees the better, but it is important to match your platform with your needs.
Make the most of introductory offers. Competition is fierce amongst low-cost brokers these days, which means there's plenty of sign up bonuses on offer.
Compare online ETF brokers
ETFs are bought and sold just like regular stocks, so you'll need to sign up with an online broker to start investing in ETFs.
Important: The standard brokerage fee displayed is the trade cost for new customers to purchase $1,000 of either Australian or US shares. Where a platform charges different fees for both US and Australian shares we show the lower of the two. Where both CHESS sponsored and custodian shares are offered, we display the cheapest option.
Step 2: Create an account
Once you've chosen a trading platform or broker, you'll need to sign up for an account.
It's generally free to sign up and most platforms let you sign up online (or via an app).
However, you'll need to provide some personal information and documentation during the sign up process. This will include:
Your name, address, date of birth and contact details
Your tax file number (TFN)
Proof of ID
Bank account details
The sign up process normally takes a few minutes, but it may take longer for your account to be verified.
Our key tip for creating a trading account
Beware of inactivity fees. While it's normally free to create an account, some platforms charge inactivity fees if you don't use your account for a certain amount of time. This is important if you want to try out a number of platforms first.
Step 3: Do your research
ETFs are a relatively low-risk form of investing, but there's still a lot of variety in the types of ETFs you can invest in, especially in terms of risk and potential returns. According to our data, the best performing ETF over the last 5 years is the Betashares NASDAQ 100 ETF, with an average annual return of 22.68% (last checked 29 July 2024).
ETFs are broken up into 2 broad categories: passive and active.
If you choose to invest in a passive ETF, the managers will seek to replicate the performance of a broader equity market, sector or trend. Think of the ASX 200 or S&P 500 indices. If you take a passive approach, you'll likely just track this market.
On the other hand, some managers will choose to actively invest. The aim here is to increase returns, but it will generally cost you more in management fees and can come with more risks.
Now that you've done the hard work, the next thing to do is actually buying the ETF. You can do so by following these steps:
Fund your account (if you haven't already done so). Make sure you've deposited enough funds to cover the cost of your ETF purchase.
Search for the ETF on your trading platform. You should be able to search using the ETF's name or ticker code. For example, if you wanted to buy the Betashares NASDAQ 100 ETF, you could search for it using the NDQ ticker code.
Select the amount you want to buy. Like stocks, ETFs have a set share price. You can choose to purchase either a set number of ETF shares or a total dollar amount.
Select your order type. You'll normally have the choice of a market order (where you buy at the current price) or a limit order (where you set the price you want to buy at).
Complete the order. Once you've checked your trade, hit "Buy" or "Confirm" to submit your trade.
Still not sure what to invest in?
If you're still struggling to pick an ETF to buy, here's a list of the top 5 best-performing ETFs over the last 5 years:
Betashares NASDAQ 100 ETF (NDQ)
Betashares Geared US Equity Fund Currency Hedged (Hedge Fund) (GGUS)
iShares Global 100 ETF (IOO)
Betashares Japan ETF - Currency Hedged (HJPN)
Betashares Global Sustainability Leaders ETF (ETHI)
This list was last checked on 10 July 2024.
Step 5: Track the performance of your ETF
Now that you own an ETF, all that's left is to see how it performs.
ETFs are normally a long-term investment, but you should track your performance of your ETF against the wider market and if you feel like it's underperforming (or no longer matches your investing strategy), don't be afraid to look elsewhere.
Our key tips for tracking your ETF
Patience is key. The normal investing horizon for an ETF is 5+ years. Markets can be volatile, especially over the short term, so give your investment time to grow.
Remember your tax obligations. If you sell your ETF for a profit, you'll likely need to pay capital gains on any return you make.
Ask an expert: What are the main benefits of buying an ETF?
ETFs are a great option for those just getting started with investing as they give investors greater visibility to a number of companies and sectors. The stock market can be very intimidating for those just getting started, but ETFs offer diversification that can otherwise often take a long time to build if investing in individual stocks.
There is also generally a cost saving that comes with investing in ETFs as you're able to save on brokerage by buying units of a singular stock as opposed to paying for multiple trades for stock in every company you're interested in. You can also build a diversified portfolio of stocks more quickly – without needing a large amount of money upfront. Investing in ETFs also helps you reduce your risk, as you don't have all your eggs in one basket – or all your money in one company.
John Winters Superhero, co-founder
What types of ETFs can you buy?
The humble ETF has evolved from its start as a simple passive investing index. Nowadays, you can get an ETF for pretty much anything ranging from your more traditional passive approach to an active strategy, a thematic strategy and everything in between.
Here are the different ETF types you might want to trade:
Passive ETFs
Also known as indexed ETFs or index funds, these funds aim to replicate the returns of a specific index or benchmark. For example, you may want to invest in a fund that tracks the performance of the S&P/ASX 200 (Australian stock market) or the S&P 500 (US stock market).
Active ETFs
Also referred to as exchange traded managed funds (ETMFs), active ETFs aim to outperform the market or a particular index. These sometimes come with a higher level of risk and usually have higher management fees.
Factor and smart beta ETFs
These combine both active and passive strategies. They typically track an index but factor in additional variables, such as a higher weighting of smaller companies. Smart beta ETFs track non-traditional indices designed to invest in a selection of company stocks based on their own set of rules. The idea is to outperform the market.
Structured and synthetic ETFs
Synthetic ETFs are where things start getting a little bit more complex.
ETFs access investment assets in 2 ways: physically or synthetically. ETF issuers of a physical (or standard) ETF have purchased the underlying assets on the index it aims to replicate.
Structured or synthetic ETFs try to replicate the performance of their underlying assets through the use of derivatives. This is because it's not always practical to hold physical assets. For example, gold or commodity ETFs are often synthetic due to the fact that storing large amounts of gold is often difficult. Instead of investing in an actual lump of gold, you're investing in a contract that promises returns based on the commodity's price movements.
What is a derivative?
Derivatives are products that derive their value from underlying assets like commodities or shares. Instead of purchasing a physical asset, it is a contract with an agreed-upon return based on the price of the movements of the underlying asset.
Warning: Because structured products may use complex investment strategies, they can be much riskier than a standard index ETF.
Commodity ETFs, or exchange traded commodities (ETCs), track the performance of an underlying physical commodity, such as gold, natural resources or agricultural products.
Expert insight: The potential benefits of ETFs
"The best part about ETFs is that they are a basket of shares. There's no need to stock-pick or guess what the winning company will be. Plus it saves you money on all the brokerage fees you'd be paying if you were picking individual shares. It's no surprise that low-cost diversified ETFs are growing in popularity across Australia. They are affordable, diversified, and a great way to get into various sectors, markets, and countries without much effort. They can be a good addition to an investors portfolio. However, one thing to remember is that investing does come with risk. The market can be volatile, so knowing your risk tolerance and timeframe is important when investing in ETFs. Talking to a professional can help you tailor your goals and plans as you embark on your investing journey. "
When you invest in an ETF, the first cost you'll be aware of is the ETF unit price. However, there are other less obvious costs you need to be aware of. While ETFs typically charge lower fees than unlisted managed funds, this isn't always the case.
You should always read the PDS provided by the ETF issuer for full details of any fees that apply and how they will affect your investments. Here are the main costs to take note of:
Management fees. Just like any other managed fund, ETFs have management fees, which are sometimes referred to as the management expense ratio (MER). This fee is charged by the ETF issuer and is usually included in the unit price.
Brokerage fees. You'll need to pay brokerage fees whenever you buy or sell ETF units. These fees vary depending on the online broker you choose but usually start at around $10 or $20.
The buy/sell spread. This is the difference between the highest price you're willing to pay for an ETF unit and the lowest price at which a seller is happy to sell. The wider the spread, the more it can cost you.
Finder survey: How many ETFs do Australians hold?
Response
1
19.53%
2
17.16%
3
15.38%
5
12.43%
4
10.65%
10
5.33%
6
3.55%
8
3.55%
12
2.37%
7
2.37%
20
1.18%
30
1.18%
9
1.18%
14
0.59%
17
0.59%
19
0.59%
47
0.59%
50
0.59%
65
0.59%
90
0.59%
Source: Finder survey by Pure Profile of 1145 Australians, December 2023
Do ETFs pay dividends?
Some ETFs pay dividends if the underlying company stocks pay dividends. However, it also depends on whether the fund manager chooses to pass this on, so check this first if this is a priority. This information should be available in the ETF's product disclosure statement.
Most of the time, ETFs will pay their dividends on a quarterly basis, though this isn't a rule. If you're interested in ETF dividends, check the yield, how often it's paid and whether you can reinvest the payments back into the ETF if you choose or if it's paid into your account.
Frequently asked questions
Synthetic ETFs must feature the word “synthetic” in the product name.
The number of ETFs you should invest in will greatly depend on your own diversification strategy and the types of ETFs you buy. Diversification remains one of the most important rules of investing as it helps to reduce risks by ensuring there's no single asset that makes up a large portion of your portfolio. When it comes to buying ETFs and being diversified, if you buy a passive all-world ETF, you'd be capturing a large part of the market and you could be diversified in a single transaction. If, however, you buy more thematic ETFs, you are exposed to a sector or industry. You might be less diversified, meaning you will need to buy ETFs that match a different thematic.
Some online brokers have minimum investments as low as just a few dollars. For example, Saxo Invested has a minimum trade amount of $50. However, other brokers charge a minimum investment of the same as shares, which is $500.
No. The number of stocks purchased by an ETF will reflect the importance of each stock to the performance of the index. For example, an ETF would hold more shares in a large company like Rio Tinto or CSL than it would in the smallest companies in the top 200 index.
Yes, many robo-advisors offer access to diversified ETF portfolios. You can find more info in our robo-advisor guide.
Yes, there are ETFs available that track ASX indices and are traded on the ASX.
Yes, you can use a margin loan to fund the purchase of ETF units.
You can purchase as little as 1 share in an ETF.
Disclaimer: This information should not be interpreted as an endorsement of futures, stocks, ETFs, CFDs, options or any specific provider, service or offering. It should not be relied upon as investment advice or construed as providing recommendations of any kind. Futures, stocks, ETFs and options trading involves substantial risk of loss and therefore are not appropriate for all investors. Trading CFDs and forex on leverage comes with a higher risk of losing money rapidly. Past performance is not an indication of future results. Consider your own circumstances, and obtain your own advice, before making any trades. Read the Product Disclosure Statement (PDS) and Target Market Determination (TMD) for the product on the provider's website.
Kylie Purcell is the senior investments editor and analyst at Finder. She has completed a Certificate of Securities and Managed Investments (RG146) and specialises in investment products including online brokers, robo-advisors, stocks and ETFs. See full bio
Kylie's expertise
Kylie has written 148 Finder guides across topics including:
Hi Kathy, we can’t recommend any products however the following ASX-listed ETFs are gold-themed: The VanEck Gold Miners ETF, Betashares Global Gold Miners ETF, Global X Physical Gold, VanEck Gold Bullion ETF, Perth Mint Gold ETF, Betashares Gold Bullion ETF. Which you pick depends on your personal goals and circumstances. Remember that some gold-themed ETFs track gold mining companies and other track the price of gold bullion in either AUD or USD.
AlexanderMay 2, 2023
are there any Australian Vanguard etfs that pay monthly?
Finder
KylieMay 15, 2023Finder
Hi Alexander, I’m not aware of any Vanguard ETFs that pay monthly. Distributions are typically paid once a quarter or once a year. However it’s worth reaching out to Vanguard directly to double check this.
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which is the best ETF for gold
Hi Kathy, we can’t recommend any products however the following ASX-listed ETFs are gold-themed: The VanEck Gold Miners ETF, Betashares Global Gold Miners ETF, Global X Physical Gold, VanEck Gold Bullion ETF, Perth Mint Gold ETF, Betashares Gold Bullion ETF. Which you pick depends on your personal goals and circumstances. Remember that some gold-themed ETFs track gold mining companies and other track the price of gold bullion in either AUD or USD.
are there any Australian Vanguard etfs that pay monthly?
Hi Alexander, I’m not aware of any Vanguard ETFs that pay monthly. Distributions are typically paid once a quarter or once a year. However it’s worth reaching out to Vanguard directly to double check this.