ETF Basics: Your Portfolio’s Best Friend

Quick take: ETFs let you buy a basket of investments in one trade. They’re popular with Australians because they’re simple, low-cost, and broadly diversified.

What is an ETF?

An exchange-traded fund (ETF) is a fund you can buy on the ASX like a share. Each ETF holds many underlying investments (for example, hundreds of companies). When you buy one unit, you get a tiny slice of all those holdings.

Why do many investors start with ETFs?

• Diversification: One purchase spreads your money across many companies or bonds.
• Cost: Management fees are usually low compared to traditional funds.
• Convenience: Buy and sell during market hours via your broker.
• Clarity: ETFs publish what they hold and their ongoing fees.

Common ETF types you’ll see

• Broad market: Tracks a wide index (e.g., Australian or global shares).
• Sector or theme: Focuses on a narrower slice (e.g., technology).
• Bond: Holds government or corporate bonds.
• Dividend-focused: Targets income-paying companies.

Fees, in plain English

The main ongoing cost is the management fee (MER). It’s shown as a yearly percentage. For example, 0.10% means $10 per $10,000 per year. Check the ETF’s page or factsheet for the MER and any other costs.

How to compare simple options

• What does it hold? Australia-only, global developed markets, or a mix.
• Total cost: Look at the MER and your broker’s trading fee.
• Size & trading: Larger funds usually have tighter buy/sell spreads.
• Distribution style: Some funds pay distributions; others may reinvest.

A sensible first step approach

Many beginners start by picking one broad ETF and making small, regular contributions. That keeps things simple and helps avoid over-complicating the early days.

Educational content only — not financial advice. Consider your situation or speak to a licensed adviser.

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The simple building blocks

• Broad Australia an ETF that holds many large ASX companies.
• Broad global an ETF that holds developed markets outside Australia.
• Bonds or cash-like adds stability (helpful if you prefer smoother ups/downs).

Quick examples (Australia): BHP, Rio Tinto, Commonwealth Bank (CBA), Westpac, ANZ, NAB, Telstra.

Quick examples (Global): Apple, Microsoft, NVIDIA, Tesla broad global ETFs give you a slice of many household names in one go.

Optional: Crypto (Bitcoin/Ethereum) sleeve

• Some investors add a small allocation to BTC or ETH either directly or via a crypto ETF alongside their core ETFs.
• We’ll cover the pros/cons of direct ownership vs crypto ETFs (and why platform/exchange tokens are higher risk) in a later guide.

Next up

• Compare ETFs in 10 minutes Your quick checklist