Comparing Australian Index ETFs: VAS vs IOZ vs A200
When it comes to investing in the Australian share market through ETFs, three funds dominate the landscape: Vanguard Australian Shares Index ETF (VAS), iShares Core S&P/ASX 200 ETF (IOZ), and BetaShares Australia 200 ETF (A200). This article provides a detailed comparison to help investors make an informed decision.
Overview of the Three ETFs
Vanguard VAS
- Ticker: VAS
- Management Fee: 0.10% p.a.
- Benchmark: S&P/ASX 300 Index
- Provider: Vanguard
- Assets: Largest Australian equity ETF
iShares IOZ
- Ticker: IOZ
- Management Fee: 0.05% p.a.
- Benchmark: S&P/ASX 200 Index
- Provider: BlackRock iShares
- Assets: Second largest Australian equity ETF
BetaShares A200
- Ticker: A200
- Management Fee: 0.04% p.a.
- Benchmark: S&P/ASX 200 Index
- Provider: BetaShares
- Assets: Fastest growing Australian equity ETF
Key Differences
1. Index Coverage
VAS tracks the S&P/ASX 300 Index, which includes the top 300 companies by market capitalization. This provides broader market exposure, including mid-cap stocks.
IOZ and A200 both track the S&P/ASX 200 Index, which includes only the top 200 companies. This focuses on large-cap stocks and provides slightly more concentrated exposure.
2. Management Fees
A200 has the lowest management fee at 0.04% per annum, making it the most cost-effective option for long-term investors.
IOZ charges 0.05% per annum, slightly higher than A200 but still very competitive.
VAS charges 0.10% per annum, which is higher than the other two but still reasonable compared to actively managed funds.
3. Provider and Track Record
Vanguard is the largest ETF provider globally and has been operating in Australia since 2009. VAS was one of the first Australian equity ETFs.
BlackRock iShares is the second-largest ETF provider globally and has a strong presence in Australia. IOZ has been available since 2010.
BetaShares is an Australian-based ETF provider that has grown rapidly. A200 was launched in 2018 and has quickly gained market share.
Performance Comparison
All three ETFs have delivered similar performance over the long term, as they track very similar indices. The small differences in performance are primarily due to:
- Tracking error
- Management fees
- Index composition differences (for VAS)
Which ETF Should You Choose?
Choose VAS if:
- You want broader market exposure including mid-cap stocks
- You prefer Vanguard's brand and global reputation
- You're comfortable paying slightly higher fees for the additional diversification
Choose IOZ if:
- You want exposure to the ASX 200 only
- You prefer BlackRock's global expertise
- You want a balance between low fees and established provider
Choose A200 if:
- You want the lowest possible fees
- You're focused on maximizing long-term returns through cost minimization
- You're comfortable with a newer but growing provider
Conclusion
All three ETFs are excellent choices for Australian equity exposure. The differences are relatively minor, and for most investors, any of these ETFs would serve as a solid foundation for an Australian equity allocation. The choice often comes down to personal preference regarding fees, index coverage, and provider preference.
For cost-conscious investors, A200 offers the best value. For those seeking broader market exposure, VAS provides access to 300 companies. IOZ offers a middle ground with competitive fees and a proven track record.