SPDR S&P/ASX 200 Fund (STW)

By Jason Fittler

This is a great stock providing balance to your portfolio while reducing risk. It is also a fantastic stock for those of you who are looking to start investing in the share market.

STW is an exchange-traded fund that offers index exposure to the ASX 200 Accumulation Index. This stock means you have instant exposure to the top 200 Australian companies. This makes it the perfect addition to a portfolio which is heavily weighted to one sector or the perfect stock to start building a portfolio.

Keeping it simple, the STW will move up and down in line with the ASX 200, as such if the ASX 200 moves up 2%, STW moves up 2%. On top of this it currently pays a 10% partly franked dividend. I do expect to see this dividend drop in the coming 12 months, but I expect it will hold above 6%.

You buy this stock on the market, keeping the entry fee low… normally 2.5% compared to 4% with managed funds. There are no on going fees like managed funds and it pays a higher dividend. You can gear up into this investment through Self Funding Instalment Warrants (SFIW), no need for messy margin loans and margin calls.

This is a excellent entry point for new investors and a safe way to gear up.