There's a popular trend among investors seeking steady returns over the long term to avoid investing in single stocks in favour of diversified exchange-traded funds (ETFs).
Recent data from ETF manager Global X shows that the Australian ETF market grew by 32.7% over the year to the end of June and that it is running at a five-year compound annual growth rate (CAGR) of 26.3% per annum.
Global X says on its website:
This growth was driven by $61.6 billion in net inflows over the past year, positive market movements, and unlisted funds converting into active ETFs. Investors poured $3.5 billion into Australian ETFs in June, but the end of the financial year month is seasonally a quieter one for the industry in terms of flows. The 2026 financial year was the best financial year ever for ETF net flows with the industry taking in $61.6 billion in FY26, up 48% from FY25. The industry has now attracted around $30 billion year-to-date (YTD) and remains on track to eclipse last year's record $53 billion.
The reasons for this growth are not surprising. Buying an ETF that tracks an index removes the work and potential stress involved in picking stocks, while still allowing investors to invest thematically if they wish.
For those just getting started, here are three ETFs that keep it simple.
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Betashares Diversified All Growth ETF (ASX: DHHF)
DHHF casts its net wide, offering exposure to about 8000 companies worldwide, with 35.1% in Australian equities, 41.5% in the US, and the rest in developed and emerging markets.
Betashares says on its website:
DHHF will have a long-term exposure to 100% growth assets (shares). It is intended for use as a satellite through to standalone solution within a portfolio for investors seeking capital growth and income with a very high risk and return profile for that portion of their portfolio. A minimum investment timeframe of 5 years or more is suggested.
DHHF has returned a compound 10.48% over the past five years and has a distribution yield of 2.1% over the past year.
Vanguard Australian Shares Index ETF (ASX: VAS)
Vanguard says VAS is Australia's largest ETF, giving investors exposure to the top 300 companies listed on the ASX.
It has a very low management fee of 0.07%, and investors can start off with as little as $200 if they invest through Vanguard itself.
Vanguard says:
The ETF provides low-cost, broadly diversified exposure to Australian companies and property trusts listed on the Australian Securities Exchange. It also offers potential long-term capital growth along with dividend income and franking credits.
Unsurprisingly, VAS' top five investments are the big four banks and BHP Group Ltd (ASX: BHP).
Vanguard says $10,000 invested five years ago would now be worth $14,399.
Vanguard MSCI Index International Shares ETF (ASX: VGS)
The VGS ETF has a much wider remit than VAS, with exposure to about 1300 companies from developed countries, notably excluding Australia, so it doesn't double up with VAS.
Vanguard says on its website:
Investing internationally offers greater access to sectors such as technology and health care that aren't as well represented in the Australian share market. The ETF provides exposure to many of the world's largest companies listed in major developed countries. It offers low-cost access to a broadly diversified range of securities that allows investors to participate in the long-term growth potential of international economies outside Australia.
The ETF's largest holdings are in US tech companies, including Nvidia, Apple, and Microsoft.
Vanguard said $10,000 invested five years ago would now be worth $18,775.
The management fee for the VGS ETF is 0.18%.
