Australian Exchange Traded Funds (ETFs)

Exchange Traded Funds (ETFs) over Australian indices were launched in 2001 and have continued to gain popularity with investors. They work in the same way as all other ETFs , with the range of Australian index ETFs providing exposure over the benchmark S&P/ASX 300 Index, S&P/ASX 200 Index and the S&P/ASX 50 Index . There is also an Australian sector specific ETF covering the S&PASX 200 A-REIT (Listed Property) Index.

The current issuers of  broad based Australian indexed ETFs are State Street Global Advisers whos ETFs traded under the brand name SPDRs and Vanguard Investments.

The table below lists the ASX code of each domesitc ETF and its respective underlying strategy.

ASX Code Fund Name Underlying Strategy Details
SFY SPDR S&P/ASX 50 Fund Replicate the performance of the top 50 Australian Shares
STW SPDR S&P/ASX 200 Fund Replicate the performance of the top 200 Australian Shares
VAS Vanguard Australian Shares Index Replicate the performance of the top 300 Australian Shares

Market Making

Due to the high number of shareholders daily turnover, there is currently no Market Making requirements in SFY & STW however Market Maker obligations are in place for VAS. The role of the Market Markets (MM) is to help ensure there is sufficient liquidity in the security.

The two MMs in VAS are Citigroup and Susquehanna. When the Market Makers consistently achieve two-sided markets in the security within the maximum spread and the minimum quantity of shares as tabled below, they receive fee rebates.

Bid Price in $AUD for Shares Maximum Spread Minimum Quantity
$25< 15c 1000
>$25-$50 25c 500
>$50-$100 65c 100
>100-$150 100c 50
>150-$200 125c 50
>$200-$250 150c 50
>$250 200c 50