How to choose the right type of investment
To choose the right type of investment, it’s important to:
- Understand how the investment works
- Understand how it generates a return, and the type of return expected, for example, capital gain vs income
- Know the risks involved
- Understand the total cost of ownership. What are the fees for buying, holding, and selling the investment?
- Consider the timeframe over which you should invest to receive the expected return
- Be aware of tax implications of the investments
- Consider how the investment will contribute overall to a diversified portfolio
Active vs passive investing
Active and passive are two different approaches to investing.
The aim of passive investing typically is to track the performance of an index, in anticipation that this index will rise and therefore that your investment will appreciate over time.
In contrast, active investors typically aim to ‘beat the market’, a strategy which may seek greater returns, but may also involve higher investment risk.
Asset classes explained
Investments and asset classes can broadly be divided into growth assets and defensive assets.
Your financial needs and goals change as you move through life. A focus on growth when you’re young, and have many years until retirement, is likely to shift to an emphasis on capital preservation and income via defensive assets later in life.
Growth assets offer higher return potential, but should be viewed as higher risk investments because of their volatility, especially over shorter time periods.
Shares (equities) and property are considered growth assets.
Defensive assets are considered more stable investments with steadier returns. They usually carry lower risk levels, and are more likely to generate lower levels of return over the long term.
Cash, gold and fixed income are considered defensive assets.
Types of asset classes: Shares, fixed income & cash
Australian share ETFs give you exposure to companies listed on the Australian sharemarket and typically aim to track the performance of a sharemarket index.
International ETFs enable you to invest in overseas markets and sectors by tracking a particular index, for example, a country-specific index, a regional index, a global sector index, or a global index. International ETFs can be bought and sold on the ASX in Australian dollars, just like any other share, making it simple for Australian investors to allocate part of their portfolio to international stocks.
Technology ETFs enable you to gain exposure to a portfolio of companies within the technology and related sectors, and typically aim to track the performance of an index. Technology ETFs can offer broad tech-related exposure to technology stocks traded in a particular market, such as the Nasdaq-100, or can provide more focused exposure to a particular technology theme, such as cybersecurity or cloud computing.
Ethical and responsible ETFs
Ethical and responsible ETFs are exchange traded funds that either exclude particular industries or companies from its investment holdings, or specifically include companies or industries that meet certain sustainability targets or other ESG criteria.
A sector ETF aims to track a benchmark index for a particular sector or industry, for example, financial services, technology, or energy. Sector ETFs offer you a convenient way to access particular areas of the global or local economy.
Thematic ETFs are designed to provide exposure to a range of industries that stand to benefit from structural, long-term megatrends, such as climate change, cybersecurity, robotics and artificial intelligence.
Equity income ETFs
Equity income ETFs and exchange traded products provide exposure to dividend-paying shares. An equity income fund pays regular distributions to investors who hold units in the fund.
Cash and fixed income ETFs
Fixed income ETFs enable you to gain exposure to a portfolio of bonds, and aim to track the performance of an index. A cash ETF provides exposure to cash deposits and pays regular income distributions. Enhanced cash ETFs provide exposure to cash and high quality, short term money market securities and pay regular income distributions.
Alternative asset classes
The most well-known digital assets are cryptocurrencies such as Bitcoin and Ethereum. As well as cryptocurrencies, other infrastructure providers and market participants play an essential role in the crypto-economy e.g crypto trading venues and crypto mining companies. Our Crypto Innovators ETF provides exposure to a portfolio of companies leading the crypto economy, in a single trade on the ASX.
Commodities, such as gold or oil, can offer portfolio diversification benefits given the historically low correlation of commodities to the other major asset classes. By investing in commodity ETFs, you don’t need to directly invest in complex financial instruments such as futures, and there’s also no requirement to take physical delivery of any commodities.
Gold historically has shown low correlation to other major asset classes, so an allocation to gold can be a good diversifier as part of a broader investment portfolio. You can use ETFs to get exposure to gold by investing in a gold ETF that aims to track the price of physical gold, or an ETF that holds a portfolio of companies that are involved in the mining or production of gold.
Australia 200 ETF
The world’s lowest cost Australian shares ETF
Australian Quality ETF
Invest in a portfolio of Australia’s highest quality companies
S&P/ASX Australian Technology ETF
Gain exposure to Australia's dynamic technology sector
Managed Risk Australian Share Fund (managed fund)
Diversified Australian shares exposure, managed to reduce risk
Australian Equities Strong Bear Hedge Fund
Opportunity to profit from, or protect against a declining Australian sharemarket
Australian Equities Bear Hedge Fund
Aims to provide short exposure to the Australian sharemarket
Betashares Martin Currie Equity Income Fund (managed fund)
Actively managed portfolio of high-yielding, high-quality Australian shares
Australian Ex-20 Portfolio Diversifier ETF
Access the 180 largest companies on the ASX outside the top 20
Australian Sustainability Leaders ETF
Invest in a portfolio of sustainable, ethical Australian companies
Geared Australian Equity Fund (hedge fund)
Geared exposure to the Australian sharemarket
Australian Dividend Harvester Fund (managed fund)
Opportunity for high income from Australian shares
Australian Financials Sector ETF
Gain exposure to the biggest companies in Australia’s financials sector
FTSE RAFI Australia 200 ETF
Access a "fundamentally weighted" portfolio of 200 large Australian companies
Australian Resources Sector ETF
Gain exposure to the biggest companies in Australia's resources sector
Australian Small Companies Select Fund (managed fund)
Invest in a high-quality portfolio of Australian small-cap companies
Equity Yield Maximiser Fund (managed fund)
Generate enhanced income from Australian blue chip companies