Top 5 Australian ETFs for Beginners in 2025
Starting your investment journey can be overwhelming, but Exchange Traded Funds (ETFs) offer an excellent entry point. They provide instant diversification, professional management, and low costs - perfect for beginners. Here are five Australian ETFs that are ideal for new investors.
Why ETFs for Beginners?
ETFs are particularly suitable for beginners because they:
- Diversify automatically: One purchase gives you exposure to hundreds of companies
- Require minimal knowledge: No need to pick individual stocks
- Have low costs: Management fees are typically much lower than managed funds
- Trade like stocks: Buy and sell through any broker during market hours
- Are transparent: Holdings and fees are clearly disclosed
1. Vanguard Australian Shares Index ETF (VAS)
Why it's great for beginners:
- Tracks the S&P/ASX 300 Index, covering the largest 300 Australian companies
- Low management fee of 0.10% per annum
- Established provider with strong reputation
- Excellent liquidity and low tracking error
- Provides broad exposure to the Australian market
Best for: Investors wanting comprehensive Australian market exposure with a trusted provider.
Key Details:
- Management Fee: 0.10%
- Benchmark: S&P/ASX 300 Index
- Top Holdings: BHP, CBA, CSL, Westpac, NAB
- Distribution Yield: ~4.2%
2. iShares Core S&P/ASX 200 ETF (IOZ)
Why it's great for beginners:
- One of the lowest-cost Australian equity ETFs at 0.05% per annum
- Tracks the S&P/ASX 200, covering Australia's 200 largest companies
- Backed by BlackRock, the world's largest asset manager
- Strong performance track record
- Excellent for cost-conscious investors
Best for: Investors prioritizing low fees while maintaining broad market exposure.
Key Details:
- Management Fee: 0.05%
- Benchmark: S&P/ASX 200 Index
- Top Holdings: Similar to VAS but focused on top 200 companies
- Distribution Yield: ~4.0%
3. BetaShares Australia 200 ETF (A200)
Why it's great for beginners:
- Lowest management fee at 0.04% per annum
- Tracks the S&P/ASX 200 Index
- Australian-based provider with growing market share
- Simple, straightforward investment approach
- Competitive performance
Best for: Investors seeking the absolute lowest fees for Australian market exposure.
Key Details:
- Management Fee: 0.04%
- Benchmark: S&P/ASX 200 Index
- Top Holdings: Top 200 ASX companies
- Distribution Yield: ~4.1%
4. Vanguard MSCI Index International Shares ETF (VGS)
Why it's great for beginners:
- Provides international diversification beyond Australia
- Covers developed markets excluding Australia
- Low management fee of 0.18% per annum
- Reduces home country bias
- Access to global growth opportunities
Best for: Investors wanting to diversify beyond Australian markets.
Key Details:
- Management Fee: 0.18%
- Benchmark: MSCI World ex-Australia Index
- Top Holdings: Apple, Microsoft, Amazon, NVIDIA
- Geographic Exposure: ~68% United States, with exposure to Japan, UK, and other developed markets
5. Vanguard Diversified High Growth Index ETF (VDHG)
Why it's great for beginners:
- All-in-one diversified portfolio solution
- Automatically rebalanced
- Includes Australian shares, international shares, bonds, and property
- Single investment for complete diversification
- Suitable for long-term growth-oriented investors
Best for: Investors wanting a complete, diversified portfolio in one ETF.
Key Details:
- Management Fee: 0.27%
- Asset Allocation: 90% equities, 10% fixed interest
- Geographic Mix: 36% Australia, 35% United States, plus other markets
- Distribution Yield: ~2.8%
How to Choose
For Pure Australian Exposure
Choose VAS, IOZ, or A200 based on your preference for:
- VAS: Broadest coverage (300 companies) and trusted brand
- IOZ: Lowest cost among established providers (0.05%)
- A200: Absolute lowest cost (0.04%)
For International Diversification
Add VGS to your portfolio to reduce Australian market concentration. A common allocation is:
- 60% Australian (VAS/IOZ/A200)
- 40% International (VGS)
For Complete Diversification
Consider VDHG if you want a single investment that handles everything. It's perfect for:
- Set-and-forget investing
- Automatic rebalancing
- Complete portfolio in one purchase
Getting Started
- Open a Brokerage Account: Choose a low-cost broker (e.g., CommSec, SelfWealth, Stake)
- Decide on Your Allocation: Start with one ETF or a combination
- Invest Regularly: Consider dollar-cost averaging (investing fixed amounts regularly)
- Stay the Course: ETFs are long-term investments - avoid frequent trading
- Reinvest Distributions: Enable dividend reinvestment to compound returns
Important Considerations
- Investment Horizon: ETFs are best for long-term investing (5+ years)
- Risk Tolerance: All investments carry risk - understand your comfort level
- Diversification: Don't put all your money in one ETF or one country
- Costs: Consider brokerage fees in addition to management fees
- Tax: Understand franking credits and capital gains tax implications
Conclusion
These five ETFs provide excellent starting points for beginner investors. Whether you choose a single Australian ETF, add international exposure, or opt for an all-in-one solution, you're building a solid foundation for long-term wealth creation.
Remember, the best ETF for you depends on your goals, time horizon, and risk tolerance. Start simple, invest regularly, and let time and compounding work in your favor.
For detailed information on each ETF, visit their individual pages on Best ETFs Australia.