Best ETFs Australia 2026: Top Picks

An Exchange Traded Fund (ETF) is an investment fund that trades on a stock exchange, just like a regular share. When you buy one unit of an ETF, you're buying a small slice of every company or asset that the fund holds — giving you instant diversification without needing to buy hundreds of individual stocks.

For example, if you buy one unit of VAS (Vanguard Australian Shares Index ETF), you're investing in the top 300 companies listed on the ASX — from BHP and Commonwealth Bank to Woolworths and CSL — all in a single transaction.

ETFs have become the most popular way for Australians to invest because they offer:

• Low fees — most index ETFs charge 0.04% to 0.20% per year, compared to 1-2% for actively managed funds
• Diversification — one ETF can hold hundreds or thousands of stocks
• Simplicity — buy and sell through any online broker during market hours
• Transparency — you can see exactly what the fund holds at any time

Use our Investment Returns Calculator to model how your ETF investments could grow over time with regular contributions.

These ETFs track Australian companies listed on the ASX and are the foundation of most Australian investors' portfolios:

VAS — Vanguard Australian Shares Index ETF

• Tracks the ASX 300 (top 300 companies)
• Management fee: 0.07% p.a.
• Dividend yield: approximately 3.8-4.2% (partially franked)
• The most popular Australian share ETF with over $16 billion in assets

A200 — BetaShares Australia 200 ETF

• Tracks the ASX 200 (top 200 companies)
• Management fee: 0.04% p.a. (cheapest in category)
• Dividend yield: approximately 3.8-4.2% (partially franked)
• Nearly identical performance to VAS but slightly cheaper

IOZ — iShares Core S&P/ASX 200 ETF

• Tracks the ASX 200
• Management fee: 0.05% p.a.
• From BlackRock (the world's largest asset manager)
• Solid middle ground between VAS and A200

VAS vs A200 — which is better? A200 is cheaper (0.04% vs 0.07%) but tracks 200 companies instead of 300. In practice, the bottom 100 companies in the ASX 300 make up a tiny fraction of the index, so performance is virtually identical. On a $100,000 portfolio, the fee difference is just $30 per year. Pick either — the important thing is to start investing.

International ETFs give you exposure to companies outside Australia — essential for diversification since the ASX represents only about 2% of global stock market value.

VGS — Vanguard MSCI Index International Shares ETF

• Tracks 1,500+ companies across developed markets (US, Europe, Japan, UK)
• Management fee: 0.18% p.a.
• Top holdings: Apple, Microsoft, Nvidia, Amazon, Meta
• The go-to "set and forget" international ETF for most Australian investors

IVV — iShares S&P 500 ETF (ASX-listed)

• Tracks the S&P 500 (top 500 US companies)
• Management fee: 0.04% p.a.
• Pure US market exposure — has significantly outperformed over the past decade
• More concentrated in the US than VGS, which includes Europe and Japan

NDQ — BetaShares Nasdaq 100 ETF

• Tracks the Nasdaq 100 (top 100 US tech and growth companies)
• Management fee: 0.48% p.a.
• Heavy tech weighting: Apple, Microsoft, Nvidia, Amazon, Meta, Tesla, Alphabet
• Higher growth potential but also higher volatility

VDHG — Vanguard Diversified High Growth Index ETF

• An all-in-one fund: 90% shares (Australian + international) and 10% bonds
• Management fee: 0.27% p.a.
• Automatically rebalances across multiple asset classes
• Perfect for investors who want a truly hands-off single-ETF portfolio

Bond ETFs provide stability and income, reducing overall portfolio volatility. They're particularly relevant in 2026 as interest rates remain elevated compared to the pre-2022 era.

VAF — Vanguard Australian Fixed Interest Index ETF

• Tracks Australian government and corporate bonds
• Management fee: 0.20% p.a.
• Yield to maturity: approximately 4.0-4.5%
• Lower volatility than shares — acts as a portfolio stabiliser

VGB — Vanguard Australian Government Bond Index ETF

• Tracks Australian government bonds only (no corporate bonds)
• Management fee: 0.20% p.a.
• Lower credit risk than VAF (government-backed)
• Suitable for conservative investors or those approaching retirement

Should you hold bonds? A common rule of thumb is to hold your age in bonds as a percentage (e.g., 30% bonds at age 30, 60% bonds at age 60). In practice, younger investors with a long time horizon may not need bond ETFs at all — the higher long-term returns from shares compensate for short-term volatility. Bond ETFs become more important as you approach retirement and need to preserve capital.

Thematic ETFs target specific industries, trends, or investment styles. They're higher risk than broad market ETFs but can offer strong returns if the theme plays out.

HACK — BetaShares Global Cybersecurity ETF

• Tracks global cybersecurity companies (CrowdStrike, Palo Alto Networks, Fortinet)
• Management fee: 0.67% p.a.
• Cybersecurity spending is growing at 12-15% annually as threats escalate
• One of BetaShares' most popular thematic ETFs

ESGI — VanEck MSCI International Sustainable Equity ETF

• Tracks international companies screened for ESG (Environmental, Social, Governance) criteria
• Management fee: 0.55% p.a.
• Excludes fossil fuels, weapons, tobacco, gambling
• For investors who want international exposure with ethical screening

SEMI — BetaShares Global Semiconductors ETF

• Tracks global semiconductor companies (Nvidia, TSMC, ASML, Broadcom)
• Management fee: 0.57% p.a.
• Semiconductors are the backbone of AI, cloud computing, and EVs
• High growth but also high volatility — semiconductors are cyclical

Important: Thematic ETFs should be a small satellite allocation (5-15% of your portfolio), not the core. They have higher fees, lower diversification, and can underperform for extended periods if the theme goes out of favour.

With hundreds of ETFs available on the ASX, here's what to focus on when choosing:

1. Fees (MER). The Management Expense Ratio is the annual fee charged by the fund. For broad market index ETFs, anything under 0.20% is good, and under 0.10% is excellent. Over a 30-year investing horizon, a 0.50% difference in fees can cost you tens of thousands of dollars on a $200,000 portfolio.

2. Diversification. How many companies or assets does the ETF hold? A fund tracking 1,500 stocks is more diversified than one tracking 100. More diversification generally means less risk.

3. Dividend yield and franking. Australian share ETFs typically yield 3.5-4.5% and come with franking credits, which reduce or eliminate tax on dividends. International ETFs don't have franking credits but often have higher capital growth. Use our Franking Credits Calculator to see the after-tax impact.

4. Tax efficiency. ETFs that distribute less income (and more capital growth) are generally more tax-efficient for high-income earners, because you defer tax until you sell. International ETFs tend to be more tax-efficient than Australian ETFs for this reason.

5. Fund size and liquidity. Larger funds (over $1 billion in assets) tend to have tighter buy/sell spreads, meaning you lose less money when trading. Avoid very small or new ETFs with low trading volume.

A simple portfolio that works for most Australians: 40% VAS + 60% VGS. That gives you Australian shares with franking credits plus broad global diversification. Adjust the split based on your preference for income (more VAS) versus growth (more VGS).

Buying ETFs is the same as buying shares — you need a brokerage account. Here are the main options for Australian investors:

CMC Markets — $0 brokerage on the first buy of any stock each day (up to $1,000). Best for small, regular investments. Full-featured platform with market data and research tools.

SelfWealth — Flat $9.50 per trade regardless of trade size. No inactivity fees. Simple, clean interface that's popular with ETF investors who make regular larger purchases.

CommSec — Australia's largest broker. $5 per trade up to $1,000, then $10 up to $5,000. Integrates with CommBank accounts. Higher fees for larger trades but reliable and well-established.

Stake — $3 per trade for ASX. Also offers US market access. Modern app-first design aimed at younger investors.

Vanguard Personal Investor — $0 brokerage on Vanguard ETFs (VAS, VGS, VDHG, etc.). If you primarily invest in Vanguard products, this is the cheapest option. Limited to Vanguard funds for the $0 brokerage benefit.

Steps to get started:

1. Open an account with a broker (takes 5-10 minutes online)
2. Verify your identity (driver's licence or passport)
3. Transfer funds from your bank account
4. Search for the ETF code (e.g., VAS, VGS, IVV)
5. Place a "market order" or "limit order" and confirm

That's it — you're now an ETF investor. Consider setting up regular automatic investments (dollar-cost averaging) to build your portfolio consistently over time.

There are three costs to understand when investing in ETFs:

1. Management Expense Ratio (MER). This is the annual fee the ETF provider charges for running the fund. It's expressed as a percentage of your investment and is deducted automatically from the fund's returns — you don't pay it separately. A MER of 0.07% on a $50,000 investment costs you $35 per year. This is the single most important fee to compare between similar ETFs.

2. Brokerage. This is the fee your broker charges each time you buy or sell ETF units. It varies by broker — from $0 (CMC, Vanguard Personal Investor in some cases) to $10-$30 per trade. If you invest $500 per month and pay $10 brokerage each time, that's 2% of your investment eaten by fees before you even start. Solution: either use a $0-brokerage broker or invest larger amounts less frequently (e.g., $3,000 quarterly instead of $500 monthly).

3. Buy-sell spread. This is the difference between the price you pay to buy (ask price) and the price you'd receive to sell (bid price). For popular ETFs like VAS or VGS, the spread is typically 0.01-0.05% — negligibly small. For smaller or thematic ETFs, spreads can be 0.10-0.30%. Wider spreads mean you lose more on each transaction.

The bottom line: For a long-term investor buying broad market ETFs, total costs should be well under 0.30% per year including all fees. That leaves over 99.7% of your returns in your pocket — compared to actively managed funds where fees of 1-2% can consume a third of your real returns over 30 years.

Use our Compound Interest Calculator to see how fee differences compound over decades.