How to buy ETFs in Australia

Investors can buy ETFs through a standard broker or online trading platform. Getting started usually begins with choosing an account and identifying your long-term financial goals. No matter where you are in your financial journey or what your goals may be, one timeless principle tends to hold true: the sooner you start investing, and the longer you stay invested, the more chance you have of meeting your investing goals.

Some new investors may wonder whether ETF investing is complicated. In practice, the process can often be broken into a series of straightforward steps.

Step 1 – Define your investing goals

Begin by identifying why you are investing. Your goals may influence both your investment strategy and your time horizon.

Common goals include:

• Retirement savings
• Building long-term wealth
• Saving for education
• Generating investment income

Step 2 – Open a trading account

Most investors buy ETFs through a broker or online trading platform, which provides access to ETF trading and portfolio management tools.

Common ways Australians hold ETFs include:

• A standard online trading or brokerage account
• A CHESS-sponsored account, where you are issued a Holder Identification Number (HIN)
• A custodial account offered by some platforms
• Within a superannuation or self-managed super fund (SMSF) that allows direct ASX investments

Step 3 – Understand your risk tolerance

Risk tolerance reflects your comfort level with market fluctuations. Investors with longer time horizons may be able to tolerate more volatility than those approaching a major financial goal.

Step 4 – Research the ETF

Review each ETF's:

• Investment objective
• Investment strategy
• Holdings
• Historical performance
• Asset class exposure
• Risk profile

This information can be found in the fund's Product Disclosure Statement (PDS) and Target Market Determination (TMD). Understanding these aspects can help ensure the ETF aligns with your objectives.

Step 5 – Compare costs and liquidity

Two important considerations include:

Management fee – the annual cost of managing and operating the ETF, expressed as a percentage and reflected in the fund's unit price.

Liquidity – the ease with which ETF shares can be bought and sold. Higher liquidity may contribute to narrower bid/offer spreads and potentially lower trading costs.

Step 6 – Place your order

After selecting an ETF, you can place a buy order through your trading account, using an order type consistent with your goals.

Step 7 – Monitor and rebalance periodically

Over time, market movements may cause a portfolio to drift away from its target allocation. For example, after a period of strong share market performance you may end up with a greater amount of your total wealth invested in equities than you are comfortable with.

Periodic rebalancing is important to ensure continued alignment with your investment objectives and risk tolerance.

Selling your ETF

Selling follows the same process in reverse. You place a sell order for the number of units you wish to dispose of, choosing your order type in the same way. Considerations around timing, spreads and brokerage apply.

Selling units is generally a capital gains tax event, so keep your sell confirmation alongside your original purchase records.

If your order does not execute

The most common reason an order does not fill is a limit order set at a price the market has not reached. Check your limit price against the current bid and offer, confirm the market is open, and check whether your order was set as good-for-day or good-till-cancelled. Larger orders may also fill in parts, leaving a balance still open.

If none of these explain it, contact your broker or trading platform, as they can see the status of your order on the exchange.

Which order type should I use?

Due to execution-price risk, limit orders are generally preferable in most circumstances — but if the limit price isn't reached, the trade won't be executed.

When is the best time of day to trade?

ETFs can be purchased and sold anytime during exchange trading hours.

Markets can be more volatile near open and close. Consider trading after the first, and before the last, 15 minutes of the day. There is also less market making activity during open and close, which can result in wider spreads.

Consider the underlying exposure. If you hold ETFs with underlying exposures on Asian markets, consider trading when those underlying markets are open, as the value of the ETF should be easier to calculate and the bid/offer spread tighter.

Liquidity is always an important consideration when selecting any investment. The more liquid an investment, the easier and more cost effective it should be to trade. A less liquid investment can take longer to buy or sell and cost more to do so.

ETFs can be bought and sold during the trading day. When evaluating ETF liquidity, it is important to remember that ETFs differ from ordinary shares in one distinct way – ETFs are open-ended investment vehicles. This means that the number of shares in the ETF can actually increase or reduce to meet investor demand.

Although ETFs trade like shares, the liquidity of an ETF works very differently to the liquidity of a share. With an ordinary share, trading reflects the buyers and sellers interacting on an exchange at a price that represents the economic value of a company and investor supply and demand. The trading of the ETF also depends on the investor supply and demand of the ETF, but this only partially accounts for the liquidity of an ETF (on-screen liquidity). There are in fact multiple layers that make up the entire liquidity of an ETF.

iShares ETFs are available on a number of online trading platforms in Australia. Learn more about some of these platforms by clicking on the logos below. This is not an exhaustive list of platforms and is not a recommendation to use any specific platform. Logos, trademarks and images are used for illustrative purposes only and are the property of their respective owners.

             

         

A broker is a professional who buys and sells securities such as ETFs on a stock exchange on behalf of clients. You can buy iShares ETFs through a broker during daily trading hours. Please note that brokerage and other fees may apply.

The ASX has a tool to help you locate a stockbroker which you can access here.

ETF fees and costs are generally transparent and can typically be found in an ETF’s Product Disclosure Statement (PDS) and other fund documents. Reviewing these documents can help investors understand the costs associated with a particular ETF before investing.

When investing in ETFs, there are generally two categories of costs to be aware of: costs associated with the ETF itself, and costs that may be charged by your broker or investment platform.

Costs associated with the ETF

ETFs incur ongoing fees and costs to manage and operate the fund. The management fee is generally expressed as an annual percentage and is deducted from the ETF’s assets, reducing the ETF’s investment return rather than appearing as a separate charge on an investor’s account.

Any applicable indirect costs—certain costs incurred within the ETF or an underlying fund that reduce returns rather than being charged separately to the investor—form part of the ETF’s disclosed management fees and costs.

An ETF may also incur transaction costs when buying or selling underlying assets. These fees and costs are generally reflected in the ETF’s performance and are disclosed in the fund’s product documents.

Because fees and costs reduce the amount remaining invested, even relatively small differences can affect long-term returns, with the impact accumulating over time.

When comparing ETFs, investors may wish to consider total fees and costs alongside other factors such as investment objectives, underlying exposure, liquidity and risk characteristics.

Costs associated with your investment platform

Depending on the broker or investment platform you use, additional fees may apply when investing in ETFs.

These may include:

• Brokerage fees when buying or selling ETFs
• Platform or account-related fees
• Foreign exchange costs when converting currencies to invest in overseas-listed ETFs

Not all brokers and platforms charge the same fees, so it may be helpful to review your provider’s fee schedule before investing.

ETFs can be used for a variety of reasons, such as a financial instrument for a tactical decision or as a tool for efficient market access as a long term buy and hold in an investor's portfolio. With a multitude of use cases, it's not surprising that ETFs are used by all types of investors. Whether a particular ETF suits your long-term plan depends on the exposure it provides, what it costs and the risks it carries.

Build a stronger core:

There are diversified and low cost ETFs designed to help build a strong foundation for portfolios

Seek income:

ETFs can help generate income through bonds, dividend-paying stocks and preferred stocks.

Prepare for market turbulence:

Minimum volatility ETFs are designed to help reduce risk and keep you invested.

Invest internationally:

ETFs offer access to virtually all investable markets.

Act on opportunities:

ETFs offer the same trading flexibility as stocks, with added diversification.

From stocks and bonds covering country and regional exposures, thematics and sector ETFs, digital assets, and commodities, ETFs provide investors with more choices to access more segments of more markets than ever before.

Explore the main types of ETFs