Fair Value Tracker: How much are you paying for the companies inside your Aussie shares ETF?

Put $1,000 into the Betashares Australia 200 ETF (ASX: A200), and about $216 goes to two companies: BHP Group (ASX: BHP) and Commonwealth Bank of Australia (ASX: CBA). On 13 October, BHP traded 28% and Commonwealth Bank 43% above Morningstar’s estimate of their fair value.

In a market-capitalisation weighted index the largest companies have outsized influence on the overall index. But with the two largest companies meaningfully overvalued, it raises a question: how does the price you pay for the companies inside A200 compare with our analyst estimates of their value?

Welcome to Fair Value Tracker, a new series for investors who own, or are considering, Australia’s most popular ETFs. Each edition, we compare one fund’s holdings with our analysts’ fair value estimates to show whether the ETF trades at a premium or discount, and the drivers of any price to value differences.

We start with A200, a low-cost way to own the 200 largest companies on the ASX.

Betashares Australia 200 ETF A200

• Total Cost Ratio: 0.04%
• Assets under management: $11.1 billion (AUD, as of 13 October 2026) Morningstar Medalist Rating: Bronze
• Benchmark: Solactive Australia 200 Index
• Morningstar Category: Equity Australia Large Blend

For A200, investors are paying a price to fair value of approximately 1.09, which represents a 9% premium to our analyst estimates of the fair value for the shares held by the ETF. While our analysts only cover 150 of the 200 companies in the ETF, the companies within our coverage universe make up 94.9% of the value of the concentrated ETF.

But the headline figure hides a split. Six in 10 of the companies within our coverage universe traded below our fair value estimates. The premium came from a small number of very large holdings which were overvalued according to our analysts. The 40% of covered companies trading above fair value made up 72% of the money invested in the companies we cover. Put another way, of every $100 invested in A200 on 13 October, about $66 went to companies trading more than 10% above our fair value estimates, and $19 to companies more than 10% below.

How A200 is built

A200 tracks the Solactive Australia 200 Index, which holds the 200 largest ASX-listed companies, weighted by free-float market value (only counting shares available to trade). This means that the larger the company, the larger the share of the fund.

The 10 largest holdings make up almost half of A200, and financials and materials companies together make up around 60%, Weighting by size keeps turnover and costs low and reflects the market as it stands, but it also shows how an investor’s return depends heavily on a small number of companies.

Which holdings contribute the most to the premium?

BHP closed at $61.28 on 13 October against our fair value estimate of $48.00, and Commonwealth Bank at $154.50 against $108.00. Our analysts raised BHP’s fair value estimate from $46.00 on 9 October because of stronger copper prices, but said the increase was more than reflected in the share price. Excluding both, A200’s price/fair value falls from 1.09 to 1.04. Excluding the 10 largest holdings, it falls to 0.98.

Investor enthusiasm for copper is one reason for BHP’s premium. Our analysts expect it to provide more than half of BHP’s earnings once commodity prices settle at their long-term assumptions. Copper prices were near historical highs in early October. Our analysts assume copper settles near US$3.80 a pound from 2030, close to the long-run cost of production, and iron ore at about US$75 a tonne.

Our analysts give CBA a wide moat and expect earnings to grow about 5% a year. But at a forward price/earnings ratio of around 26 at the time of its August results, analyst Nathan Zaia described the share as materially overvalued, writing that “the fundamentals no longer matter to the share price.”

The other big banks, National Australia Bank (ASX: NAB), Westpac Banking (ASX: WBC) and ANZ Group (ASX: ANZ), also traded above fair value on 13 October, as did Rio Tinto (ASX: RIO), Wesfarmers (ASX: WES) and Macquarie Group (ASX: MQG). The chart below shows how far each of the 10 largest holdings traded from fair value.

Where is the value in A200?

Not every share in A200 trades at a premium. Excluding financials and materials, the rest of the fund traded at a 0.94 price to fair value, which represents a 6% discount to our analyst estimates. The chart below shows each sector’s premium or discount to fair value, ordered by its share of the fund.

In energy, Woodside Energy Group (ASX: WDS), the ninth-largest holding, traded about a quarter below our fair value estimate of $44.00, and Santos (ASX: STO) at a price to fair value of 0.80.

Information technology traded at the largest discount of any sector, at a price to fair value of 0.73, but makes up only about 2% of A200. The picture within the sector is mixed. Xero (ASX: XRO) traded at 0.60 and WiseTech Global (ASX: WTC) at 0.37, while Technology One (ASX: TNE) traded at 1.39.

What does this mean for investors?

Valuation levels will change over time as markets fluctuate and our analysts reassess their estimates. For long-term investors valuation is one of several considerations for making investment decisions. Others include how a particular investment aligns with your goals, tax consequences, and transaction costs.

It is also worth noting that A200 is a passive ETF. There is a meaningful amount of data showing that investing passively leads to positive outcomes for investors. Investing passively is not just about the investments. It also describes the approach taken by the investor. Constantly rotating between passive ETFs is not passive investing.

How we calculated this

All data in this article is as of 13 October 2026. This analysis uses Morningstar analyst fair value estimates, which are available for 150 of A200’s 200 holdings (94.9% of the fund by weight). The other 50 holdings (4.8%) and cash and futures (0.3%) are excluded.

Fund price/fair value divides the market value of the covered holdings by their value at our analysts’ fair value estimates, so each company counts in proportion to its weight in the fund.

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