Now could be the right time to run the rule over the Betashares Australia 200 ETF (ASX: A200) and Betashares FTSE RAFI Australia 200 ETF (ASX: QOZ). Using our internal quantitative analysis, these ETFs appear to offer good exposure to the Australian shares sector.
What do they do?
The Betashares A200 ETF provides exposure to the largest 200 Australian companies, based on market capitalisation. Unlike many other Australian shares ETFs, A200 uses the Solactive Australia 200 Index. This is virtually the same thing as the indices provided by S&P/ASX, as it also uses a market capitalisation weighting.
The BetaShares QOZ ETF provides exposure to a ‘fundamentally weighted’ index of 200 large Australian shares. This ETF focuses on weighting the portfolio with a focus on ‘economic importance’ rather than market capitalisation, while also aiming to outperform traditional market-cap weighted indices.
To learn more about the A200 ETF, read our free ETF investment report once you’re done with this article.
To make this article easier to digest, we’ll just study the fees or ‘management expense ratio’ (MER). Using data for July 2021, the A200 ETF has an MER of 0.07% while the QOZ ETF had a yearly fee of 0.40%. As a result, A200 comes out on top. Keep in mind, a more useful metric to know is the fee quartiles that these ETFs find themselves in (note: quartile 1 is best). Meaning, we take all the Australian shares ETFs in our database and divide them into 4 quartiles, based on their fees. For example, any ETF which has a fee below 0.3% would be considered in our first (best) quartile.
Performance analysis
Performance is important. Keep in mind, performance isn’t everything — and past performance is not indicative of future performance. It’s just one part of a much bigger picture. The reason we say performance is not everything is because of volatility of financial markets and the economy from one year to the next. Some ETFs and funds can put in a good return one year just to generate poor returns the next time around. That’s why we prefer three-year or seven-year track records over one-year track records. It can smooth out the temporary performances caused by external factors. Both ETFs have achieved our three-year performance hurdle. As of July 2021, the A200 ETF had an average annual return of 10.75%. During the same time, the QOZ ETF returned 9.12%.
Lastly, we need to consider the issuer or provider of the ETF. There are too many factors that go into our internal scoring of fund providers to detail here (you’d get bored pretty quickly). So here’s the quick version. The issuer for both of these ETFs is Betashares, so we can’t separate these ETFs based on provider scores alone. That said, let’s look at investments into the ETFs so far. The A200 ETF had FUM of $1,598.49 million while QOZ had $368. million according to our data for July 2021. We believe more FUM can be a sign of investor interest/uptake — and the ETF provider’s ability to market the ETF to new investors and advisers.
Our takeaway
To keep reading about these two ETFs, be sure to visit our free A200 ETF report or QOZ ETF review.
In summary, the A200 ETF rates better for our internal scoring methodology but not by much compared to QOZ.
Please, keep in mind, there is much more to picking a good ETF. That’s why you should now use these skills to find the best ETF you can. If you want the name of our team’s top ETF pick for 2021, keep reading…
