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Our Pick of the Best ETFs for Australians In 2024
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Best for high-dividend yield
SPDR S&P/ASX 200 Resources Fund (OZR)
4.4
Our ratings take into account a product's rewards, fees, rates and other category-specific attributes. All ratings are determined solely by our editorial team.
Funds Under Management
$151.4 million
As of June 19
Management Fees
0.34%
5-Year Return
11.54%
As of early June
Funds Under Management
$151.4 million
As of June 19
Management Fees
0.34%
5-Year Return
11.54%
As of early June
Why We Picked It
This fund solely intends to track the S&P/ASX 200 Resources Index, with its sector allocation of its portfolio being spread across diversified mining and metals, oil and gas industries, and similar. It is mostly made up of BHP stocks (38.07%), and unlike many other ETFs in this list, is actively managed rather than a passive index.
Since it is actively managed, it does has a slightly higher management fee, which is expected. Investors should note that the fund pays out dividends on a semi-annual basis, with a dividend yield of 7.34%—a solid return.
Pros & Cons
- High-dividend yield
- Actively managed fund
- Lower FUM than big players
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Best for long-term investors
Vanguard MSCI Australian Large Companies Index ETF (VLC)
4.3
Our ratings take into account a product's rewards, fees, rates and other category-specific attributes. All ratings are determined solely by our editorial team.
Funds Under Management
$190 million
As of early June
Management Fees
0.20%
5-Year Returns
8.40%
As of early June
Funds Under Management
$190 million
As of early June
Management Fees
0.20%
5-Year Returns
8.40%
As of early June
Why We Picked It
Established in 2011, the Vanguard MSCI Australian Large Companies Index ETF seeks to track the return of the MSCI Australian Shares Large Cap Index. Its sector allocation is split between financials (36.5%), materials (25%), health care (12%), energy (6.6%) and consumer staples (5.5%), and provides exposure to the largest companies and property trusts on the ASX.
Its highest percentage holding is BHP at nearly 18%, with the remaining spread across companies within the index. Its large spread makes it more tolerant to market volatility, and therefore could be a preferred long-term investment. As Vanguard notes, VLC has historically generated “over 4% yield with around 90% franking“, a figure that is slightly higher than the Australian stock market.
Pros & Cons
- More tolerant to market volatility
- Quarterly dividends
- Very low one-year return so suitable only for long-term investors
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Best for Investors in Asian markets
Vanguard FTSE Asia ex Japan ETF (VAE)
4.1
Our ratings take into account a product's rewards, fees, rates and other category-specific attributes. All ratings are determined solely by our editorial team.
Funds Under Management
$350 million
As of May 31
Management Fee
0.40%
5-Year Return
2.74%
Funds Under Management
$350 million
As of May 31
Management Fee
0.40%
5-Year Return
2.74%
Why We Picked It
Vanguard FTSE Asia ex Japan Shares Index ETF (VAE) tracks the return of the FTSE Asia Pacific Index (excluding Japan, Australia and New Zealand). Its holdings are mostly in emerging markets, with some 30% (as of June 20) invested in China’s emerging markets, as well as India and Taiwan. VAE also has allocations in the Pacific regions of Hong Kong, Singapore and Taiwan.
Unlike many other funds, VAE pays out its dividend on a quarterly basis. This is an ETF that may suit Australian investors wanting to access a broad swathe of developing Asian economies.
Pros & Cons
- Quarterly dividend payouts
- Access to Asian markets
- Potential volatility with emerging markets
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Best for Investors seeking banking exposure
VanEck Australian Banks ETF (MVB)
4.0
Our ratings take into account a product's rewards, fees, rates and other category-specific attributes. All ratings are determined solely by our editorial team.
Funds Under Management
$181.4 million
As of June 19
Management Fees
0.28%
5-Year Returns
5.55%
As of March 31
Funds Under Management
$181.4 million
As of June 19
Management Fees
0.28%
5-Year Returns
5.55%
As of March 31
Why We Picked It
VanEck Australian Banks ETF (MVB) aims to track the returns of the MVIS Australia Banks Index, a sector index designed to capture the performance of the banking heavy-weights in the Australian economy. The portfolio mostly consists of shares in Commonwealth Bank (21.24%) and Westpac (19.77%), with remaining stocks spread among other Australian banks.
The fund pays dividends three times per year with a good dividend yield of 5.65%, and a decent five-year average return rate of 5.55%.
Pros & Cons
- Strong dividend yield
- Focus on well-capitalised Australian banks
- Poor one-year return
Our Methodology
As stated above, the ‘best’ ETFs to invest in will depend on the individual objectives of the investor, as not only are investments inherently volatile, but the best choice for an investor varies from person-to-person. In order to fairly analyse and determine the above list, we used a detailed methodology.
Firstly, more than 20 high-performing ETFs in Australia were compared against 15 key factors. These factors were:
- What sector, commodity, currency or index the ETF tracks;
- Who issues the ETF;
- The year the ETF was formed as older ETFs were likely to be better established;
- The objective of the ETF;
- If it tracks a sector or an index, what the sector allocation is;
- What the portfolio majorly consists of;
- Whether it is actively managed or passively tracked;
- The total size of the funds under management as larger ETFs are less likely to be wound up;
- What the total net asset value is;
- How frequently the dividends are paid, if it’s a dividend ETF;
- The management fees associated with investing in the fund;
- What one-year return rate the fund has; and
- The fund’s five-year return rate (a more reliable metric);
All of these metrics were compared and contrasted, with each ETF then receiving a ranking out of five depending on how the metrics stacked up. From there, the nine highest scoring ETFs made it onto the list for our favourite ETFs for Australians in 2023. It’s worth noting that this list is not considered exhaustive as not every ETF was analysed, but is rather intended to act as a sample menu of some of the high-quality ETFs available to investors.
About Star Rankings
You will note that we have included a star rating next to each product or provider. This rating was determined by the editorial team once all of the data points above were considered, and the pros and cons of each product attribute was reviewed. The star rating is solely the view of Forbes Advisor editorial staff. Commercial partners or advertisers have no bearing on the star rating or their inclusion on this list. Star ratings are only one factor to be considered, and Forbes Advisor encourages you to seek independent advice from an authorised financial adviser in relation to your own financial circ*mstances and investments before you decide to choose a particular financial product or service.
How Do I Invest in an ETF?
Australians can invest in ETFs in a few simple steps, as outlined below. For more information, read our How To Buy ETFs In Australia guide.
Firstly, just as you would to purchase stocks, you will need to open a brokerage account if you do not have one already. This can either be through a firm, or you can find an online broking service or share trading platform–which is the most common option in our digital world.
Not all online brokerage services have the option to trade ETFs, so it’s important that you make sure the one you sign up for does. If you already have a brokerage account with a broker that doesn’t offer ETF trading, you will have to open up a new brokerage account with one that does in order to be able to buy and sell ETFs.
Once you have the means to invest in ETFs via an online broker, you’ll need to decide on your investment strategy; this includes how much you want to invest, how you will allocate your investment, and what type of ETF you are wanting to invest in. Once you’ve made these decisions and researched the ETFs available that fit your strategy, you can make the purchase.
If you’re managing your investment portfolio on your own (rather than via a robo-advisor), you’ll need to select and purchase the ETFs yourself via your broker. The process is just like buying shares on the stock market, and whichever broker you choose will determine exactly what steps are involved.
Keep in mind that your ETF investment journey doesn’t end once you’ve made your purchase. Eventually, you’ll want to sell your investment in the hopes of making a profit, so you should consider what your exit plan is at the time of purchase. As with any investment, it pays to play the long game.
How To Compare ETFs
Exchange-traded funds are all unique, and vary in their desirability depending on the type of asset they track, the sector they are focused on, or the level of risk they carry.
Despite their differences, there are common factors of ETFs that you can use to consider what may best fit your investment needs.
Markets and sectors
As explained earlier, exchange-traded funds can track any number of markets, sectors or commodities, which is why it’s important to consider what the fund you choose is tracking.
If you’re a green investor, or someone interested in sustainability, you likely wouldn’t want to invest in a fund that tracks industries related to fossil fuels. Another example is gambling or tobacco: if you are not interested in investing in these types of companies, then you would also not want to choose a fund that tracks a related market or sector.
Dividends
Dividends are also known as distributions, and while many ETFs do pay out dividends, some may not. It’s always worth knowing what you will and will not be receiving from the investment–and how regularly these dividends (if any) are paid out.
Commonly, dividends are distributed annually, but they can also be paid out on a semi-annual or quarterly basis. Quarterly dividend distributions may be more attractive to investors, due to the more regular pay-outs.
Along with understanding how regularly dividends are paid out, it’s also important to understand the dividend yield of the ETF. The dividend yield is the percentage of the purchase price paid in dividends during the prior 12 months.
Active or Passive ETFs?
An ETF can either be passive or active: passive ETFs are those that passively track an index and usually aim to match its performance, while actively-managed ETFs aim to outperform the index. Due to being actively managed, they usually have higher management fees than those that are passive.
Management Fees
As stated, active ETFs usually have higher management fees. But, even if it’s a fund passively tracking an index, you will still encounter management costs. It’s important to note that these differ from brokerage fees, which is the cost you are charged by your broker when purchasing the ETF.
Management fees, on the other hand, are charged on an annual basis and are expressed as a percentage. The ideal figure is 0.2% or under, but they can be as high as 1%.
History: Performance, Investor Trust and Longevity
While past performance is not an indicator of future performance, it’s still a helpful guardrail when choosing which ETF to invest in. It’s also important to consider when the fund was established—as the longer the fund has been in existence, the more reliable track record it has to demonstrate performance over time. Newer funds shouldn’t be disregarded by investors because of this fact; it should simply be a consideration.
That’s especially true when it comes to looking at the history of returns. A fund that has been around for quite some time will be able to showcase its five- or even ten-year return history, while a fund still in its infancy may only be able to provide its return history for the past 12-months.
This is a key reason that when comparing a range of ETFs to collate the above list, Forbes Advisor looked at both one-year and five-year returns.
The advice and information provided by ForbesAdvisor is general in nature and is not intended to replace independent financial advice. ForbesAdvisor encourages readers to seek expert advice in relation to their own financial decisions and investments.
Data research: Mia Dunn
Featured Partner
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eToro
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Invest in a wide variety of ETFs
Explore ETFs from Vanguard, iShare and others on eToro
2
Saxo Markets
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Minimum trade
No minimum trade
Market Access
ASX, as well as more than 40 international markets.
Account Fees
No monthly account or subscription fee for classic account.
eToro Service ARSN 637 489 466 promoted by eToro AUS Capital Limited ACN 612 791 803 AFSL 491139. Capital at risk. Other fees apply. See PDS and TMD.
Frequently Asked Questions (FAQs)
What are the best ETFs in Australia?
It’s hard to determine the best ETFs within a market, especially since there is no ‘one size fits all’ in the world of investments. However, Forbes Advisor Australia was able to create a list of our favourite nine ETFs currently available for Australian investors by undergoing a stringent analysis.
A wide range of ETFs were compared in order to create the list, from the date of inception to the regularity in which dividends are paid.
After analysing the broader market and establishing the top nine performers, Forbes Advisor has then selected iShares Core S&P/ASX 200 ETF (IOZ), iShares Global 100 ETF (IOO), and SPDR S&P/ASX 200 Resources Fund (OZR) as the three highest scoring funds.
Are ETFs the same as index funds?
No, exchange-traded funds (ETFs) and index funds are two separate types of investments–although they do have many similarities. These similarities include diversification, relatively low fees and usually a sustainable long-term growth of profits. Index funds are always passive index investments, whereas ETFs are usually passively tracking an index, but not always.
Here’s an in-depth look at the similarities and differences of ETFs and index funds.
Do ETFs pay monthly dividends?
The vast majority of ETFs pay dividends to investors on an annual basis, although some may pay these on a more frequent basis such as semi-annually or quarterly. It is very rare for an ETF to pay dividends monthly, but not unheard of.
What is Australia's best performing ETF?
There are a number of high-performing ETFs judging by their one, five and ten-year returns, but it depends whether you are interested in Australian broad-based ETfs, sector ETFs, currency ETFs strategy ETFs and so on, as well as your overall investment strategy and goals. But as an example, one of the highest-performing broad-based ETFs—that is, it tracks a broad index, such as the ASX 200—is the Vanguard MSCI Australian Large Companies Index ETF, which has returned 13.91% over the year. Another high-performer, is the SPDR S&P/ASX 200 Resources Fund, which according to the ASX Investment Products report, is the top overall performer and dividend ETF on the ASX (with a dividend yield of 7.34%).
This doesn’t mean these options are necessarily right for you, of course: do your research and make sure you understand how one ETF compares to another.
Is it a good time to invest in ETFs?
Timing the market, and knowing when (and if) to purchase an ETF is highly subjective. Unless you’re a seasoned trader, who understands how to parse the various performance reports of ETFs and is well-versed in the terminology, then timing the market will be an issue. The best question to ask yourself, especially if you’re new to ETFs, is: are they right for me and my investment portfolio and will I be able to hold them for the long-term? You can read more in our guide to building an investment portfolio.
Information provided on Forbes Advisor is for educational purposes only. Your financial situation is unique and the products and services we review may not be right for your circ*mstances. We do not offer financial advice, advisory or brokerage services, nor do we recommend or advise individuals or to buy or sell particular stocks or securities. Performance information may have changed since the time of publication. Past performance is not indicative of future results.
Forbes Advisor adheres to strict editorial integrity standards. To the best of our knowledge, all content is accurate as of the date posted, though offers contained herein may no longer be available. The opinions expressed are the author’s alone and have not been provided, approved, or otherwise endorsed by our partners.
Sophie VenzEditor
Sophie Venz is an experienced editor and features reporter, and has previously worked in the small business and start-up reporting space. Previously the Associate Editor of SmartCompany site, Sophie has worked closely with finance experts and columnists around Australia and internationally. Sophie grew up on the Gold Coast and now lives in Melbourne.
