If you have been thinking about investing in Australia but have no idea where to start, you are not alone. Most Australians who want to grow their wealth end up confused by the sheer number of options available. Shares, managed funds, property, superannuation… it can feel overwhelming.
Here is the good news. Exchange Traded Funds, or ETFs, are widely considered the single best starting point for beginner investors in Australia. They are simple, low cost, and have delivered strong returns for Australian investors over the long term. This guide will walk you through everything you need to know to choose your first ETF and start building your wealth in AUD.
What is an ETF and Why Does It Make Sense for Australians
An ETF is a collection of shares bundled together into a single investment you can buy and sell on the ASX just like an ordinary share. When you buy one unit of an ETF, you are instantly invested in dozens or even hundreds of different companies at once.
Think of it this way. Instead of picking one Australian company to invest in and hoping it does well, you buy an ETF that holds the top 200 or 300 Australian companies. If one company performs badly, the others cushion the blow. This is called diversification, and it is one of the most important principles in investing.
For Australian beginners, ETFs make sense for several key reasons:
You do not need to be an expert to pick stocks. The ETF does the work for you by simply tracking an index. You pay very low fees compared to managed funds. Some Australian ETFs charge as little as 0.04 percent per year. You can start with as little as AUD 50 through platforms like Pearler or Stake. You get instant diversification from your very first investment.
The Best ETFs for Australian Beginners in 2025
Here are the top ETFs that consistently appear on every Australian beginner’s list, all available on the ASX and tradeable through your Australian broker.
VAS, Vanguard Australian Shares Index ETF
VAS is probably the most well known ETF in Australia and is often the very first investment beginner investors make. It tracks the ASX 300, which means it holds shares in the 300 largest Australian companies including Commonwealth Bank, BHP, CSL, Westpac and many more.
The management fee is just 0.07 percent per year. On a AUD 10,000 investment, that works out to just AUD 7 per year in fees. The fund has paid consistent dividends over many years, which are franked dividends, meaning you receive a tax benefit that makes them even more valuable for Australian investors.
If you want simple, broad exposure to the Australian economy, VAS is an excellent starting point.
VGS, Vanguard MSCI Index International Shares ETF
While VAS covers Australia, VGS gives you access to over 1,500 companies from developed markets around the world including the United States, Japan, the UK and Europe. Companies like Apple, Microsoft, Amazon and Nestle are all inside VGS.
The management fee is 0.18 percent per year. The reason this slightly higher fee is justified is the extraordinary breadth of companies you get access to. One unit of VGS gives you exposure to some of the most powerful companies on the planet.
Many Australian financial planners and investors suggest combining VAS and VGS to get both Australian and international exposure. A common starting allocation is 70 percent VGS and 30 percent VAS, though this depends entirely on your personal goals.
A200, BetaShares Australia 200 ETF
A200 is very similar to VAS but covers the top 200 Australian companies rather than 300. What makes A200 stand out is its remarkably low fee of just 0.04 percent per year, which is the cheapest Australian shares ETF available on the ASX.
If you are primarily interested in Australian companies and want to keep your costs as low as humanly possible, A200 deserves serious consideration. The performance difference between A200 and VAS is minimal, so many cost conscious investors prefer A200.
VDHG, Vanguard Diversified High Growth Index ETF
VDHG is often called the one fund portfolio because it is essentially a complete diversified investment in a single ETF. It holds a mix of Australian shares, international shares, bonds and other assets all managed automatically by Vanguard.
The fee is 0.27 percent per year, which is higher than VAS or VGS individually, but when you consider you are getting an entire diversified portfolio, it represents reasonable value. For beginners who want to invest once and forget about rebalancing, VDHG is enormously popular.
DHHF, BetaShares Diversified All Growth ETF
Similar to VDHG but without the bonds, DHHF holds 100 percent growth assets. It has a slightly lower fee at 0.19 percent per year and is growing in popularity among younger Australian investors who have decades of investing ahead of them and can afford to take more risk.
How to Buy ETFs in Australia
You need a brokerage account to buy ETFs. Here are the most popular options for Australian beginners:
Stake is a popular choice for Australian investors who want to start with US stocks and Australian ETFs. The platform is easy to use and there are no monthly fees. Pearler is specifically designed for long term ETF investors and makes it easy to automate your investments. Many Australian investors on a buy and hold strategy prefer Pearler because it encourages regular investing rather than frequent trading. CommSec is the biggest broker in Australia and is owned by Commonwealth Bank. If you already bank with CBA, it is very easy to set up. Fees are slightly higher than Stake or Pearler but many Australians value the established reputation.
How Much Do You Need to Start
This is one of the most common questions from beginners and the answer is less than most people think. Through Pearler, you can start investing with as little as AUD 50. Through Stake, the minimum is similarly low. Some ETFs on the ASX trade at under AUD 100 per unit, meaning your first investment can be very accessible.
The more important question is how regularly you can invest. Even AUD 200 per month invested consistently over 10 years can build into a significant portfolio through the power of compounding returns.
Understanding ETF Fees in Australia
ETF fees are expressed as a management expense ratio or MER. This is an annual percentage deducted automatically from the fund. You never actually pay this out of pocket. It is simply reflected in the ETF’s performance.
Here is a quick comparison of the fees for the ETFs mentioned in this guide:
VAS charges 0.07 percent per year. VGS charges 0.18 percent per year. A200 charges 0.04 percent per year. VDHG charges 0.27 percent per year. DHHF charges 0.19 percent per year.
As a general rule, the lower the fee the better, all else being equal. Australian ETF fees are generally very competitive compared to traditional managed funds which often charge 1 to 2 percent per year.
Tax on ETF Investments in Australia
When you invest in ETFs in Australia, the Australian Tax Office has specific rules you need to be aware of. Here is a simplified overview.
Dividends you receive from Australian ETFs are usually franked, meaning they come with a tax credit called a franking credit. This credit offsets your tax on the dividend, and if your tax rate is lower than 30 percent, you may even receive a refund.
Capital gains tax applies when you sell your ETF units for more than you paid. If you hold your units for longer than 12 months before selling, you receive a 50 percent CGT discount, meaning you only pay tax on half the gain. This is one of the biggest tax advantages available to Australian investors and is a strong reason to hold your ETFs for the long term.
You can read more about capital gains tax in Australia in our dedicated CGT guide on Financebaz.
How to Build Your First ETF Portfolio
Most Australian beginner investors start with one of these three approaches.
The single fund approach means you choose one diversified ETF like VDHG or DHHF and invest everything there. It is simple, low maintenance and fully diversified. Many financial experts argue this is actually the best approach for most people because it removes the temptation to tinker.
The two fund approach combines VAS for Australian exposure and VGS for international exposure. A popular allocation is 70 percent VGS and 30 percent VAS. You rebalance once a year by adding more to whichever fund has fallen behind.
The three fund approach adds a bonds ETF like VAF to the mix for stability. This is more suitable for investors who are closer to needing their money or who prefer a smoother ride with less volatility.
Common Mistakes Australian Beginners Make with ETFs
Understanding what not to do is just as important as knowing what to do.
Trying to time the market is one of the most common and costly mistakes. Nobody can consistently predict when the market will go up or down. The evidence overwhelmingly shows that time in the market beats timing the market.
Investing too much in Australia is another pitfall. Australia makes up less than 2 percent of the global stock market by value. Holding 100 percent Australian shares means you are missing out on 98 percent of the world’s investment opportunities.
Selling during market downturns locks in losses and prevents you from benefiting from the recovery. Every major market crash in history has been followed by a full recovery and new highs.
Checking your portfolio every day adds stress without adding value. Set up your automated investment plan, check in quarterly at most, and let compounding do its work.
Start Your ETF Journey Today
Investing in ETFs is one of the most powerful financial decisions you can make as an Australian. The combination of low fees, instant diversification, and the ASX’s long track record of growth makes ETFs an ideal vehicle for building wealth over time.
The most important step is to start. Even a small initial investment of AUD 500 gets you into the market and starts building the habit of regular investing.
If you are ready to start, open a brokerage account with Stake or Pearler, choose one of the ETFs mentioned in this guide, and make your first investment. Your future self will thank you.
For more reading on Australian investing, check out our guide to how superannuation works in Australia and our comparison of the best stock brokers available to Australian investors.
This article is for educational purposes only and does not constitute financial advice. Please consult a licensed financial adviser before making investment decisions. Past performance does not guarantee future results.