Key points

  • With more than 2,000 companies listed on the ASX, it can be difficult to know where to start investing
  • ETFs make it simple by allowing you to invest in groups of shares instead of specific companies
  • CommSec’s user friendly app CommSec Pocket streamlines investing through automated payments, low fees and educational content for beginners

What are ETFs?

ETFs are a great way to build a diversified portfolio by allowing you to invest in groups of shares instead of specific companies.

These groups are themed and can represent industries, commodities or markets.

How do I invest in ETFs?

Once you’ve decided what ETF to invest in, the next decision is the amount and how often to invest.

You may choose to set aside an amount each month or decide to use the spare cash you have.

With CommSec Pocket, you can invest as little as $50*.

Set up automated payments

One way to automate your payments is ‘dollar cost averaging’, which involves setting up your account to automatically invest a fixed amount on a regular basis.

By automating your payments, you can take a less hands-on approach and still be sure that you won’t miss a month.

Grow your money

As your investment grows, you can choose to set up a distribution reinvestment plan with the share registry.

This ensures that the dividends from your investment are automatically reinvested and you don’t need to worry about manually reinvesting.

Things to know before investing

There are several fees you might come across once you start investing in ETFs. These are some of the most common fees:

Brokerage fee

The first cost you face when investing in ETFs is the brokerage fee.

Every time you buy or sell units in an ETF, it’s the same as if you were buying or selling shares in an individual company - you have to pay a brokerage fee.

Management cost

ETFs also incur an annual management cost, which is generally included in the unit price (the current market price of units in the fund).

The management cost includes all relevant fees and costs associated with managing the ETF, including custodian fees, accounting fees, audit fees and index licence fees.

The annual management cost is expressed as a percentage. For example, a 0.5% annual management cost would represent $50 on a $10,000 investment each year.

Management costs can vary significantly from one ETF to another – from as low as 0.1% to as high as 1% or more – so it’s important to check before investing. 

Selling cost

Another cost that you may incur when buying or selling an ETF is known as the ‘bid/ask spread’.

This is the difference between the highest price that a buyer is willing to pay for units in an ETF and the lowest purchase price a seller is willing to accept.

When you decide to buy or sell, the order will be placed as soon as possible at the best price available. However, depending on the bid/ask spread at the time, this may mean paying more than the ETF is worth.

Tax on distributions and capital gains applies to ETFs, just as it does with shares, and there may be different tax implications for investing in international ETFs.

For example, if you invest in an ETF that is operated in the US, you would be subject to US withholding tax. But this is generally reduced under the Australia/US Double Tax Agreement, based on several conditions.

ETFs vs managed funds 

ETFs usually have lower fees than actively-managed funds because they generally don’t buy and sell shares as often. 

The more managed funds buy and sell, the more they have to pay through commissions, which can affect a fund’s performance and eat into your returns.

However, as well as the potential for actively-managed funds to deliver higher returns than ‘passive’ funds like ETFs, you can usually make regular contributions for no extra cost, whereas with an ETF you must pay a brokerage fee each time you invest.

Our investment options

Start investing in a selection of ETFs from as little as $50+ with CommSec Pocket, a micro-investing app that lets you invest anywhere, anytime.

*Other fees & charges may apply. 

+CommBank App and CommSec Pocket T&Cs apply, $2 per trade up to $1,000; 0.20% for trades above $1000.


Commonwealth Securities Limited ABN 60 067 254 399, AFSL 238814 (CommSec) is a wholly owned but non-guaranteed subsidiary of CBA. Investing carries risk. Consider the Product Disclosure Statement and Target Market Determination for each ETF prior to making an investment decision. Fees & charges may apply.

Things you should know

This article is intended to provide general information of an educational nature only. It does not have regard to the financial situation or needs of any reader and must not be relied upon as financial product advice. Investors should consult a range of resources, and if necessary, seek professional advice, before making investment decisions in regard to their objectives, financial and taxation situations and needs because these have not been taken into account. Any securities or prices used in the examples given are for illustrative purposes only and should not be considered as a recommendation to buy, sell or hold. You can view the CommSec Share Trading Terms and Conditions and Financial Services Guide, and should consider them before making any decision about these products and services. Past performance is not indicative of future performance.

© Commonwealth Securities Limited ABN 60 067 254 399 AFSL 238814 (CommSec) is a wholly owned but non-guaranteed subsidiary of the Commonwealth Bank of Australia ABN 48 123 123 124 AFSL 234945.  CommSec is a Market Participant of ASX Limited and Cboe Australia Pty Limited (formerly CHI-X Australia Pty Limited), a Clearing Participant of ASX Clear Pty Limited and a Settlement Participant of ASX Settlement Pty Limited.