BetaShares to introduce Australia’s first FTSE 100 ETF

Jul 8th, 2019 | By | Category: Equities

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Sydney-based ETF issuer BetaShares is set to unveil the BetaShares FTSE 100 ETF (F100 AU) on the Australian Securities Exchange.

Australia to welcome its first FTSE 100 ETF BetaShares

The fund will be the first ETF in Australia to provide targeted exposure to the UK equity market.

The fund, which according to Bloomberg is scheduled to begin trading on 17 July 2019, is the country’s first ETF to provide exposure to the UK’s flagship equity market index, the FTSE 100.

The FTSE 100 represents the performance of UK blue-chip stocks and essentially consists of the 100 largest firms listed on London Stock Exchange, weighted by float-adjusted market capitalization.

Index constituents represent around 80% of the UK’s total listed market cap.

Investors in the fund will gain access to a UK equity index that is tilted towards financials, energy, and consumer staples stocks with weights of 20.7%, 17.1%, and 15.8% respectively. The next largest sector exposures are materials (11.1%) and health care (9.6%).

Being the first UK-focused equity ETF to list in Australia, the fund provides investors with a liquid and convenient vehicle to access this important capital market. It is ideal for those who believe the UK stock market will surprise to the upside as Brexit developments continue to unfold.

The ETF will come with an expense ratio of 0.45%.

The price tag may seem a little steep considering equivalent Europe-listed ETFs charge as little as 0.07% (e.g. products from BlackRock and HSBC). That said, the cost is broadly in line with other European equity ETFs listed in Australia. For example, the ETFS Euro Stoxx 50 ETF (ESTX AU), which tracks large-cap euro zone stocks, comes with an expense ratio of 0.35% compared to as little as 0.05% for the comparable exposure in Europe.

Interestingly, BlackRock and Vanguard lowered the expense ratios on their flagship Australian equity ETFs last month in what appeared to be a response to the success of a low-cost challenger product from BetaShares. With both BlackRock and Vanguard offering low-cost FTSE 100 ETFs in Europe, it could be one of them who now turns the tables and undercuts BetaShares’ new fund.

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