Using ETFs for passive income (step by step, with ETF examples)

Owen Rask, Chief Investment Officer of Rask Invest, speaks with Betashares Senior Investment Strategist Cameron Gleeson about how to use ETFs for passive income in this Australian Finance Podcast.

Topics covered in this market update

• Cameron’s first (and most recent) investment
• LICs versus ETFs
• How ETFs actually produce income
• Risk levels of ETFs

ETFs featured:

• AAA – cash ETF
• MMKT – cash plus ETF
• A200 – top 200 Aussie shares
• QOZ – top Aussie shares, fundamentally weighted
• YMAX – yield maximiser
• QPON – bond ETF
• HBRD – hybrid fund
• BSUB – bond ETF

List of questions & talking points with Cameron Gleeson

What was your most recent investment (personally)?

What was the first investment?

Why would someone choose an ETF versus a LIC for income? Can you take that from the perspective of a retiree and for a 30-40-year-old?

Let’s now talk income from stocks. Talk to us about how an ETF actually pays income? Use AAA and MMKT as an example here.

• Side note, why would someone use AAA over MMKT?
• Is it Core or Satellite?

Okay, now let’s talk about stocks and how shares ETFs pay income. How does that work?

Okay, now let’s level up. Imagine I want to invest in big companies, but with a different focus. So my ETF doesn’t just hold the ‘biggest stocks’ like A200. But now I get companies that are filtered for certain factors. How does something like QOZ work?

• How do you actually find the ‘factors’ you use to weight the ETF?
• Can you discuss the advantages of the QOZ approach and how it might affect long-term returns versus say, something like A200?
• What is the YMAX ETF? How is that different?
• Are these Core or Satellite?

Okay, so far we’ve cash, cash with a lil bit of bonds, vanilla shares with dividends and strawberry flavour (QOZ). How about when it comes to things like bonds and ‘hybrids’, like QPON or BSUB? What is this strategy and how do people use it for income?

• Is it Core or a Satellite?

Finally, gets quickly cover off on a quick checklist or ‘process’ for investors to decide if an investment should be core or satellite?