If you're looking to build a low-cost, long-term portfolio through the ASX, it is hard to go past exchange-traded funds (ETFs).
Two of the most popular ASX ETFs among Australian investors are the Vanguard US Total Market Shares Index ETF (ASX: VTS) and the BetaShares Australia 200 ETF (ASX: A200).
Both provide instant diversification, both come with low fees, and both have been used by countless investors to grow wealth over time. But they are not the same — and the best choice depends on your investment goals and preferences.
Here's how to think about choosing between them.
Vanguard US Total Market Shares Index ETF
The VTS ETF gives you exposure to more than 4,000 US-listed companies, ranging from household names to smaller growth players. It aims to track the performance of the CRSP US Total Market Index, which includes large, mid, small and micro-cap stocks.
That means you'll own giants like Apple (NASDAQ: AAPL), Microsoft (NASDAQ: MSFT), Nvidia (NASDAQ: NVDA), Amazon (NASDAQ: AMZN) and Alphabet (NASDAQ: GOOG) — the heavy hitters of global tech and innovation, as well as smaller names like Foot Locker Inc (NYSE: FL) and Lululemon Athletica Inc (NASDAQ: LULU).
Who is VTS suited for? This fund is arguably suitable for investors wanting global growth exposure with a heavy tilt to the US. Or those looking to benefit from sectors less represented in the Australian market — like technology and healthcare. And anyone who already owns a lot of Australian shares and is looking to diversify offshore.
BetaShares Australia 200 ETF
The A200 ETF provides investors with exposure to the largest 200 companies on the ASX.
This makes it a simple way to invest in the Australian economy and own familiar names like Commonwealth Bank of Australia (ASX: CBA), BHP Group Ltd (ASX: BHP), CSL Ltd (ASX: CSL), and Woolworths Group (ASX: WOW).
This ETF is also known for its low management fee, making it one of the cheapest ways to access the Aussie share market.
But who is A200 suited for? This could be investors who prefer to keep things local and want exposure to dividend-paying Australian blue chips. It could also be useful for SMSF investors or those looking for franked income streams. Or anyone building a core Australian portfolio and looking to hold long-term.
However, it is worth noting that the A200 ETF is more concentrated in sectors like financials and resources, which can make it less diversified compared to global ASX ETFs.
Foolish takeaway
So, should you buy VTS or A200? That depends on what you're looking for. If you want global diversification, growth exposure, and access to the world's biggest tech names, VTS could be a smart addition. But if you're building a portfolio focused on income, franking credits, or just want to keep it close to home, A200 might be the better fit.
