Exchange traded funds have become one of the easiest ways for everyday Australians to build wealth without picking individual stocks. Whether you're a first-time investor or looking to diversify an existing portfolio, understanding how to find the best etf Australia has to offer can make a real difference to your long-term returns. In this guide, we break down the different types of ETFs available locally, how they compare to index funds, and what to look for before you invest.
What Is an ETF?
An Australian ETF (Exchange Traded Fund) is a basket of assets — shares, bonds, commodities, or a mix of all three — that trades on the ASX just like an individual stock. Rather than buying shares in a single company, an ETF lets you buy a slice of dozens or even hundreds of companies in one transaction. Most ETFs are designed to track a specific index, such as the S&P/ASX 200 or the S&P 500, which is why they're often grouped together with index funds Australia investors already know and use.
Because ETFs are passively managed — meaning there's no fund manager actively picking winners and losers — they typically come with lower fees than actively managed managed funds. That cost efficiency, combined with instant diversification, is a big part of why any well-chosen Australian ETF has become so popular with everyday investors over the past decade.
Every Australian ETF listed on the ASX has to publish its holdings, fees, and objectives publicly, which makes it much easier for investors to compare one australian etf against another before deciding where to invest.
Top-Performing ASX ETFs in FY26
Returns move around constantly, so any "best performing" list is really just a snapshot in time — but it's a useful starting point when researching etfs to invest in right now. Based on independent market data to 30 June 2026, these were among the standout performers for the year:
Data source: ASX-listed fund performance data, 1-year returns to 30 June 2026, compiled from publicly available provider and market data.
For investors more interested in steady, long-term compounding than chasing last year's winners, research from Livewire Markets on risk-adjusted consistency points to a different shortlist — funds with a long track record of solid growth without extreme swings, including the iShares Global 100 ETF (IOO), iShares S&P 500 ETF (IVV), and SPDR S&P 500 ETF (SPY), all of which lean on large-cap US equities. Over a longer five-year horizon, the Global X FANG+ ETF (FANG) has also stood out among broad growth options, returning around 18% per year on average.
It's worth remembering that a handful of the highest one-year returns above came from niche, concentrated funds (a single country or a single theme like hydrogen or semiconductors), which also carry higher volatility. Broader, diversified ETFs won't usually top an annual returns table, but they tend to be a steadier core holding for most portfolios.
ETFs vs Index Funds: What's the Difference?
The terms are often used interchangeably, but there's a technical distinction worth knowing:
- ETFs trade on an exchange throughout the day, meaning their price moves in real time and you can buy or sell whenever the market is open.
- Index funds (also called managed index funds) are usually bought and sold directly through the fund manager at the end of the trading day, at a single unit price.
Both aim to replicate the performance of a benchmark index, and both are considered a low-cost, diversified way to invest. For most everyday investors comparing index funds Australia wide, the choice often comes down to how much flexibility you want around timing your trades and which platform you're using. Many of the index funds Australia brokers offer today are simply the unlisted equivalent of a popular ETF, tracking the exact same underlying index.
Types of ETFs Available in Australia
When researching etfs to invest in, it helps to understand the main categories on offer:
1. Broad-based Australian share ETFs
These track a wide slice of the local market, such as the ASX 200 or ASX 300. They give you exposure to Australia's largest companies across banking, mining, healthcare, and retail in a single trade.
2. International share ETFs
These provide exposure to global markets like the US, Europe, or Asia, often tracking indices such as the S&P 500, NASDAQ 100, or MSCI World. They're a popular way to diversify beyond the relatively small and resource-heavy Australian market.
3. Sector and thematic ETFs
Rather than tracking a broad index, these focus on a specific industry or theme — think technology, healthcare, clean energy, or robotics.
4. Fixed income and bond ETFs
These invest in government or corporate bonds and are generally considered lower risk than share-based ETFs, making them useful for balancing a portfolio.
5. Strategy-based ETFs
These follow a particular investment approach, such as high dividend yield, value, or quality screening, rather than simply mirroring a broad market index.
How to Choose the Best ETFs Australia Has to Offer
here's no single "best" fund for everyone, and the best etfs Australia has on offer will differ depending on your goals, timeframe, and appetite for risk. That said, these factors are worth weighing up when comparing the best etf Australia brokers list:
Management fees (MER): Even a small difference in fees compounds significantly over decades, so lower-cost options are generally favoured for long-term investing.
Tracking error: How closely does the ETF actually follow its benchmark index? A large gap can eat into your returns.
Liquidity: Highly traded ETFs are easier to buy and sell without affecting the price.
Diversification: Consider whether the fund gives you exposure across enough companies, sectors, or countries to avoid concentration risk.
Historical performance: Past returns don't guarantee future results, but they can offer useful context on how a fund has performed through different market cycles.
Provider reputation: Established issuers like Vanguard, BetaShares, iShares, and State Street have long track records managing Australian-listed funds.
Ranking the best etfs Australia wide isn't a one-off exercise either — fees, performance, and fund line-ups change over time, so it pays to revisit your choices at least once a year to make sure you're still holding some of the best etfs Australia investors currently have access to.
Popular ETFs to Invest In
While the specific list of top performers shifts from year to year, some of the most widely held etfs to invest in among Australian investors fall into these well-known categories:
- Broad Australian share ETFs tracking the ASX 200, offering simple exposure to the local sharemarket.
- US-focused ETFs tracking indices like the S&P 500 or NASDAQ 100, giving Australians access to global technology and growth companies.
- High-dividend ETFs aimed at investors seeking regular income alongside capital growth.
- Global ETFs that spread investment across developed markets worldwide for broader diversification.
- Bond ETFs for investors wanting a more defensive allocation within their portfolio.
Because returns, fees, and fund line-ups change regularly, it's worth checking a comparison site or your broker's platform for the most current performance data before deciding which etfs to invest in for your own portfolio.
How to Start Investing in ETFs in Australia
Getting started is more straightforward than many new investors expect:
- Choose a broker. Online share trading platforms are typically the cheapest and easiest way to buy and sell ETFs, while full-service brokers offer personalised advice at a higher cost.
- Open and fund your account. Most platforms let you transfer money from your bank account within a day or two.
- Research your options. Compare management fees, past performance, and what index or sector each fund tracks.
- Place your order. ETFs trade like shares, so you simply search for the fund's ticker code and buy the number of units you want.
- Monitor and rebalance. Review your portfolio periodically to make sure it still matches your goals and risk tolerance.
Pros and Cons of ETFs
Pros
- Diversification across many companies or assets in a single trade
- Lower fees compared with actively managed funds
- Transparency, with most providers publishing daily holdings and pricing
- Flexibility to buy and sell throughout the trading day
Cons
- Market risk — your investment can fall in value along with the underlying index
- Currency risk for unhedged international funds
- Tracking error, where the fund doesn't perfectly mirror its benchmark
- Liquidity risk for smaller or niche funds with lower trading volumes
