Choosing your first ETF is one of the most commonly asked questions for new Australian investors. The good news: a small number of low-cost, diversified ETFs dominate the conversation — DHHF, VDHG, and VAS are the three most frequently discussed options. This article explains the key differences and what tends to suit different types of beginners.
What Makes an ETF Good for Beginners?
A beginner-friendly ETF typically has:
- Low MER — most of your money grows, not fees
- Broad diversification — no single company or sector can sink your portfolio
- Simplicity — you don’t need to manage multiple funds or rebalance constantly
- ASX-listed — easy to buy through any Australian brokerage
- Reputable provider — regulated by ASIC, assets held in trust
The Top Contenders for Beginners
DHHF — BetaShares Diversified All Growth ETF
| Feature | Detail |
|---|---|
| Allocation | 100% shares |
| Holdings | 8,000+ companies across 50+ countries |
| MER | 0.19% |
| Australian exposure | ~37% |
| International exposure | ~63% |
Why beginners like DHHF:
- One fund, one decision — the entire global share market in one trade
- Very low MER (0.19%) compared to managed funds
- No bonds — suits long-term investors who can ignore short-term drops
- Half-yearly distributions — income twice a year
Potential concerns:
- 100% shares = higher volatility. In a market crash, it can fall 30–40%
- Only 4 years of track record (launched 2020)
VDHG — Vanguard Diversified High Growth ETF
| Feature | Detail |
|---|---|
| Allocation | ~90% shares, ~10% bonds |
| Holdings | 14,000+ securities |
| MER | 0.27% |
| Australian exposure | ~36% |
| International exposure | ~54% |
Why beginners like VDHG:
- Vanguard’s global reputation and track record since 2017
- 10% bonds provide a small cushion in market crashes
- Set-and-forget — automatic rebalancing
Potential concerns:
- Higher MER than DHHF (0.27% vs 0.19%)
- Annual distributions — only one distribution per year
- Can generate larger capital gains distributions due to internal rebalancing
VAS — Vanguard Australian Shares ETF
| Feature | Detail |
|---|---|
| Allocation | 100% Australian shares |
| Holdings | ~300 companies |
| MER | 0.07% |
Why beginners like VAS:
- Ultra-low MER (0.07%) — cheapest of these three
- Quarterly distributions with franking credits
- Extremely low tracking error to the S&P/ASX 300
Why VAS alone may not suit beginners:
- Australian-only — no international diversification
- The ASX is concentrated in financials and materials
- Combining VAS with an international ETF (VGS) is better diversification, but requires managing two funds
Comparison Summary
| ETF | MER | Geographic coverage | Bonds | Distributions | Simplicity |
|---|---|---|---|---|---|
| DHHF | 0.19% | Global (Aus + International) | None | Half-yearly | ✅ One fund |
| VDHG | 0.27% | Global (Aus + International) | ~10% | Annually | ✅ One fund |
| VAS | 0.07% | Australia only | None | Quarterly | ⚠️ Need to add international |
Which Is Better for a Beginner?
For most Australian beginners who want simplicity: DHHF or VDHG are the most commonly discussed starting points. They provide instant global diversification in one trade without needing to rebalance. DHHF costs less; VDHG has a slightly longer track record and a bonds cushion.
For a slightly more hands-on beginner: A combination of VAS (Australian shares) + VGS (international developed shares) at lower combined MER (~0.11%) provides similar diversification to DHHF/VDHG but requires periodic rebalancing and two separate buys.
For simplicity on a tight budget: Starting with DHHF or VDHG removes the complexity of managing allocation percentages — any dollar invested goes into a globally diversified portfolio immediately.
The First Steps
- Open a brokerage account (CommSec, SelfWealth, Superhero, Pearler, Stake, etc.)
- Decide on a budget and regular contribution amount
- Choose one ETF from the above options that aligns with your time horizon and risk tolerance
- Set up a regular investment schedule — consider dollar cost averaging
- Avoid checking prices daily — long-term investing requires patience
Related Articles
- How to Invest in ETFs Australia
- DHHF ETF Review
- VDHG ETF Review
- VDHG vs DHHF
- ETF Portfolio Australia
- ETFs hub
- Getting Started with Investing
Frequently Asked Questions
How much do I need to start investing in ETFs in Australia? Most ASX-listed ETFs trade for $50–$150 per unit. You can start with a small amount — many platforms allow purchases from as little as $500, and some (like Pearler) offer fractional units or round-up investing. The practical minimum for cost-efficient brokerage is typically $500–$1,000 per trade (to keep brokerage as a small percentage of the purchase).
Should I invest a lump sum or small regular amounts? Both strategies work — and for most Australian beginners, a regular monthly contribution (dollar cost averaging) is practical and removes the stress of trying to pick the right time to invest. Regular investing through automated contributions (available on platforms like Pearler) helps build the habit of consistent investing.
Is it better to hold one ETF or spread across multiple? For simplicity, one diversified all-in-one ETF (DHHF or VDHG) is often sufficient for a beginner. As your portfolio grows and your knowledge deepens, you may choose to add specific exposures. But overcomplicating a portfolio early on often leads to inaction — and the cost of not investing at all significantly outweighs any benefit of complex portfolio construction.
This article provides general financial information only. ETF mentions are for educational context and are not a recommendation to buy or sell. Past performance is not a reliable indicator of future performance. For advice tailored to your situation, speak with a licensed financial adviser. You can find one through the ASIC financial advisers register or MoneySmart.