Here is your guide to the Best ETFs in Australia to invest in for 2021.
This list only includes ETFs that are listed on the ASX – those that Aussies can easily buy!
Don’t have time to read the full guide? Jump straight to each sector to find the Best Australian ETF for that market using the links below:
- Australian Shares
- Global Shares
- Emerging Market Shares
- Australian Property
- International Property
- Australian Bonds (Fixed Income)
- International Bonds (Fixed Income)
Best Australian ETF for Australian Shares
VAS – Vanguard Australian Shares ETF
Why do I recommend VAS as the Best ETF for Australian Shares?
- VAS has the lowest management fee of comparable ETFs at 0.10% pa
- That means it only costs you $1.00 per year for every $1,000 you invest
- It is the best ETF in Australia to get exposure to the ASX 300 Index
- Because VAS invests in Australian companies it pays you franked dividends
- VAS offers a Dividend Reinvestment Program
- Instead of receiving a cash dividend Vanguard will automatically buy you more shares in VAS using your dividend payout. This means you pay no brokerage fees!
- The Fund Manager is Vanguard, one of the most trusted financial groups in the world
What index does VAS track?
VAS invests in the ASX 300 Index which tracks the largest 300 companies on the Australian Stock Exchange. The ASX 300 includes all of the top 200 companies in the ASX 200 and then another 100 smaller companies.
What shares does VAS invest in?
The top 10 share holdings of VAS as of 30 November 2019 are:
- Commonwealth Bank – ASX: CBA
- CSL Limited – ASX: CSL
- BHP Group – ASX: BHP
- Westpac Bank – ASX: WBC
- National Australia Bank – ASX: NAB
- Australia and New Zealand Banking Group – ASX: ANZ
- Woolworths Group – ASX: WOW
- Wesfarmers – ASX: WES
- Telstra – ASX: TLS
- Macquarie Group – ASX: MQG
Find out more by reading Vanguard’s VAS Fact Sheet
Best Australian ETF for Global Shares
VGS – Vanguard International Shares ETF
Take a look at my full review of the Best International ETFs on the ASX
Why do I recommend VGS as the Best ETF for International Shares?
- VGS invests in 1,500+ different international shares from around the globe
- Why buy thousands of individual international shares when you can buy a single ETF that does all the work for you!
- VGS has a very low management fee of 0.18% pa
- That’s a pretty cheap way to become an owner of 1,500+ different international shares!
- The fund is domiciled in Australia, which means it is tax efficient for Australian investors
- Other Vanguard ETF’s that invest in international shares, such as VEU and VTS, are based in the USA and are not truly Australian ETFs
- Investing in ETFs like VEU and VTS is not recommended and can lead to complicated international tax obligations
- The USA has death taxes which can be triggered if you own USA based shares!
- Vanguard Australia introduced VAS and VGS as replacement options for VTS and VEU and I recommend sticking to these latest and greatest offerings
- The MSCI World Ex-Australia index that VGS invests in excludes any companies that are listed in Australia
- This makes VGS the perfect companion ETF to VAS. By investing in both VAS and VGS you are invested in all of the top companies from the developed world
VGS is actually one of the best ETFs to buy in Australia because of the low cost international diversification it provides in a single ETF.
What index does VGS track?
VGS invests in the MSCI World Ex-Australia index which tracks large and mid cap international companies. The index tracks over 1,500 different companies from 22 of the safest and well known international countries including:
- Hong Kong
What shares does VGS invest in?
The top 10 share holdings of VGS as of 30 November 2019 are:
- Apple – NASDAQ: AAPL
- Microsoft – NASDAQ: MSFT
- Alphabet (Google’s parent company) – NASDAQ: GOOGL
- Amazon – NASDAQ: AMZN
- Facebook – NASDAQ: FB
- JPMorgan Chase – NYSE: JPM
- Johnson & Johnson – NYSE: JNJ
- Visa – NYSE: V
- Nestle – SWX: NESN
- Proctor & Gamble – NYSE: PG
Best Australian ETF for Emerging Market Shares
VGE – Vanguard Emerging Markets Shares ETF
Why do I recommend VGE as the Best ETF for Emerging Market Shares?
- VGE has the lowest management fee of comparable ETFs at 0.56% pa.
- Sure this annual fee is higher than with ETFs such as VAS and VGS, but we are still only talking about $5.60 per year for every $1,000 you invest
- Try buying shares in 1,100+ companies elsewhere for less than six bucks a year. I’ll wait.
- You get exposure to 1,200+ companies from 24 emerging markets in a single ETF!
- Choose this ETF if you want to invest in some of the more esoteric places around the world including the BRIC countries (Brazil, Russia, India, China) South Korea, Taiwan and South Africa
- VGE is yet another ETF issued by our trusted friends at Vanguard
- Are you beginning to undertand why Vanguard dominates the ETF industry worldwide?
What index does VGE track?
VGE invests in the MSCI Emerging Markets Index. This index tracks over 1,200 companies from 24 countries that are considered to be emerging markets including:
- South Korea
- South Africa
What shares does VGE invest in?
The top 10 share holdings of VGE as of 30 November 2019 are:
- Alibaba Group (China)
- Taiwan Semiconductor Manufacturing (Taiwan)
- Tencent Holdings (China)
- Samsung Electronics (South Korea)
- China Construction Bank (China)
- Ping An Insurance Group (China)
- Naspers (South Africa)
- Reliance Industries (India)
- Housing Development Finance Corp (India)
- Petroleo Brasileiro (Brazil)
Find out more by reading Vanguard’s VGE Fact Sheet
Best Australian ETF for Australian Property
VAP – Vanguard Australian Property Securities ETF
Have you read our in depth reviews of all of the Best Australian REITs on the ASX?
Why do I recommend VAP as the Best ETF for Australian Property?
- VAP has the lowest management fee of comparable ETFs at 0.23% pa
- Because VAP only invests in Australian companies it pays you franked dividends
- VAP also offers a dividend reinvestment program that allows Vanguard to buy you extra shares in the fund using at no extra cost using your dividend payouts
- The fund manager is Vanguard. Don’t look so surprised.
If you already own VAS then you already own all of the companies that are included in VAP. VAS invests in the ASX 300 and the real estate investment trusts that VAP invests in are included in the ASX 300.
You should only consider VAP if you are specifically looking for additional exposure to Australian REITS beyond that which is included in VAS.
What index does VAP track?
VAP invests in the ASX 300 A-REIT Index. This index tracks all of the A-REITs (Australian Real Estate Investment Trusts) that are included in the ASX 300 Index.
What shares does VAP invest in?
The top 10 share holdings of VAP as of 30 November 2019 are:
- Goodman Group – ASX: GMG
- Scentre Group – ASX: SCG
- Mirvac Group – ASX: MGR
- Dexus – ASX: DXS
- Stockland – ASX: SGP
- GPT Group – ASX: GPT
- Vicinity Centres – ASX: VCX
- Charter Hall Group – ASX: CHC
- Unibail-Rodamco-Westfield – ASX: URW
- Shopping Centres Australasia Property Group – ASX: SCP
Best Australian ETF for International Property:
DJRE – SPDR Dow Jones Global Real Estate ETF
Why invest in DJRE?
- Management fee is 0.50% pa.
- Tracks the SPDR Dow Jones Global Select Real Estate Securities Index
- Fund Manager: State Street Global Advisors
- There are no other ETFs available on the Australian share market that solely invest in International Property
Read my complete guide to the Best International REITs on the ASX.
Best Australian ETF for Commodities:
QCB – BetaShares Commodities Basket Currency Hedged ETF
Why invest in QCB?
- Provides exposure to precious metals, livestock, energy, industrial metals and agriculture
- No exposure to iron ore or coal
- Management fee is 0.69% pa.
- Hedged against movements in the AUD/USD exchange rate
- Tracks the performance of an Index of Commodity Futures, the S&P GSCI Light Energy Index Excess Return (Hedged into AUD)
- Fund Manager: Betashares
- There are no other ETFs available on the Australian share market that solely invest in a commodities basket
Best Australian ETF for Gold:
PMGOLD – Perth Mint Gold ETF
Why invest in PMGOLD?
- Provides a fully paid call option to one hundredth of a troy ounce of physical gold
- Lowest management fee of comparable ETFs at 0.15% pa.
- Tracks the performance of physical Gold
- Fund Manager: Perth Mint Australia
- Backed by physical gold held by HSBC Bank
- Management fee of 0.40% pa.
- Tracks the performance of physical Gold
- Fund Manager: ETF Securities
Best Australian ETF for Australian Bonds (Fixed Income)
VAF – Vanguard Australian Fixed Interest ETF
Why do I recommend VAF as the Best ETF for Australian Bonds?
- Low management fee of 0.20% pa.
- Invests in 600+ Australian Bonds issued by the Federal Government, State Government and Australian Companies
- Fund Manager: Vanguard
What index does VAF track?
VAF tracks the Bloomberg Ausbond Composite 0+ yr Index. This index includes investment grade fixed interest bonds issued in Australia by the Federal Government, State Governments, and high quality investment grade Corporations.
What Bonds does VAF invest in?
The top 10 bond holdings of VAF as of 30 November 2019 were issued by:
- Commonwealth of Australia
- Queensland Treasury
- NSW Treasury
- WA Treasury
- Victorian Treasury
- Kfw (A German Government-owned Bank)
- South Australian Government Financing Authority
- European Investment Bank
- Landwirtschaftliche Rentenbank (A German State-owned Bank)
- International Bank for Reconstruction and Development
Find out more by reading Vanguard’s Fact Sheet for VAF
Best Australian ETF for International Bonds (Fixed Income)
VBND – Vanguard Global Aggregate Bond Index (Hedged) ETF
Why do I recommend VBND as the Best ETF for Australian Bonds?
- Provides exposure to high quality income producing bonds issued by governments around the world
- Lowest management fee of comparable ETFs at 0.20% pa.
- Hedged in AUD to protect against foreign exchange risk
VBND is also one of the best ETFs to buy in Australia full stop because it gives you a low cost portfolio of globally diversified bonds in a single purchase
What index does VBND track?
VBND tracks the Bloomberg Barclays Global Aggregate Float Adjusted Index hedged into Australian dollars. This index includes high-quality, income-generating securities issued by governments, government-owned entities, government-guaranteed entities, investment-grade corporate issues and securitised assets from around the world.
What Bonds does VBND invest in?
The top 10 bond holdings of VBND as of 30 November 2019 were issued by:
- United State Treasury
- Government of Japan
- Federal National Mortgage Association
- Republic of France
- Republic of Italy
- Government National Mortgage Association
- Federal Republic of Germany
- Government of United Kingdom
- Kingdom of Spain
- Federal Home Loan Mortgage Corporation
Find out more by reading Vanguard’s VBND Fact Sheet
That about sums up the Best Australian ETFs on the market for 2021.
Top 5 ETFs in Australia
One of the most frequently asked questions that I get asked is: What are the Top 5 ETFs in Australia?
With so many ETFs now trading on the Australian market it can be hard to narrow the list down to the best 5 ETFs. But if I had to choose:
- VGS – Vanguard International Shares ETF
- VAS – Vanguard Australian Shares ETF
- VGE – Vanguard Emerging Market Shares ETF
- VBND – Vanguard International Bond ETF
- VAF – Vanguard Australian Bond ETF
If you purchase these top 5 ETFs you will have the makings of a globally diversified ETF portfolio.
You will own ETFs that track not just the Australian Share and Bond Markets, but you will also own the best of the International Share and Bond Markets and shares from Emerging Market Countries too.
Now go ahead and take this information and learn how to create your own Australian ETF Portfolio
Is there an ETF you think has been hard done by and should be recognised as a Top Aussie ETF in this guide?