Now could be the right time to take a look at the iShares Core S&P/ASX 200 ETF (ASX: IOZ) and SPDR S&P/ASX 50 ETF (ASX: SFY). Using our internal quantitative analysis, these ETFs seem to offer good exposure to the Australian shares sector.
Here’s how we think about the IOZ and SFY ETFs
The iShares IOZ ETF provides exposure to the largest 200 Australian shares, based on market capitalisation. This is a low-cost way to access top Australian companies through a single fund.
The SPDR SFY ETF is the only Australian ETF providing exposure to Australia’s top 50 listed companies, by market capitalisation. SFY provides a low-cost way to invest in the ASX’s top 50 companies through a single fund.
Get our team’s IOZ ETF review, available free when you click this link: access the free investment report.
To make this article easier to digest, we’ll just study the fees or ‘management expense ratio’ (MER). Using data for December 2021, the IOZ ETF has an MER of 0.09% while the SFY ETF had a yearly fee of 0.29%. As a result, IOZ 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 December 2021, the IOZ ETF had an average annual return of 14.66%. During the same time, the SFY ETF returned 13.93%.
In summary
To keep reading about these two ETFs, be sure to visit our free IOZ ETF report or SFY ETF review.
In summary, the IOZ ETF rates better for our internal scoring methodology but not by much compared to SFY.
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 2022, keep reading…
