ETFs in Australia: How Exchange-Traded Funds Work on the ASX
An ETF (Exchange-Traded Fund) is an investment fund that trades on the ASX like a regular share but holds a collection of assets inside it — giving you instant exposure to hundreds or thousands of companies through a single purchase.
ETFs have become the dominant investment vehicle for Australian retail investors. You buy and sell them through any share broker (CommSec, SelfWealth, Stake, CMC Markets) just like buying BHP or CBA shares. They trade throughout the day at live market prices and settle in T+2 business days.
The most popular Australian ETFs include: VAS (Vanguard Australian Shares — tracks the ASX 300 for 0.07% p.a.), VGS (Vanguard MSCI International — 1,500+ companies across 23 developed markets for 0.18% p.a.), A200 (BetaShares Australia 200 — top 200 ASX companies for 0.04% p.a.), and VDHG (Vanguard Diversified High Growth — a single all-in-one option holding 90% shares and 10% bonds for 0.27% p.a.).
Why are ETFs so popular in Australia? Three reasons: cost (annual fees often below 0.20%), simplicity (one purchase gives diversified exposure), and tax efficiency (franking credits flow through to investors on Australian equity ETFs, and there is no capital gains event when the ETF rebalances internally).
A common starting portfolio for Australian investors is VAS + VGS in a 40/60 or 30/70 split. This gives you Australian share exposure with franking credits alongside broad global diversification — two ETFs covering thousands of companies across the world.
ETFs do not protect against market downturns. If the ASX 200 falls 25%, VAS falls with it. This is expected and normal. The key is maintaining a long-term mindset and continuing to invest through volatility.
Richify Tip
Richify walks you through the most relevant ASX-listed ETFs for your goals and risk profile — from simple two-fund portfolios to more sophisticated multi-asset approaches.
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