A two-ETF portfolio combining one Australian shares ETF and one international shares ETF is one of the most commonly discussed approaches among Australian do-it-yourself investors. It is straightforward to manage, low cost, and provides broad diversification. This article compares the most widely discussed combinations and what some investors consider when choosing between them.
Last updated: Q2 2026. Fee figures are reported from fund manager disclosures and reviewed quarterly. This article is general information only.
Why some investors consider a two-ETF approach
One consideration is simplicity. Holding two funds means there are only two positions to track, two sets of distributions to record, and one decision about how to split new contributions. Some investors find that fewer holdings make a portfolio easier to stay consistent with over time. A second consideration is cost: broad-market index ETFs are among the lower-fee products on the ASX, and combining two of them keeps the blended management fee low. A third is coverage: one Australian shares ETF plus one global shares ETF can hold thousands of companies across dozens of countries in a single, repeatable structure. None of this makes a two-ETF portfolio appropriate for any particular person. The right structure depends on individual circumstances. This is general information only and does not constitute financial advice.
The most widely discussed combinations
The combinations below pair an Australian shares ETF with an international shares ETF. Fee figures are pulled live from the ETFLens dataset. Past performance is not a reliable indicator of future returns, and none of the following is a recommendation to invest in any of these ETFs.
1. VAS + VGS
VAS tracks the S&P/ASX 300 (large Australian companies), at 0.07% p.a.. VGS tracks developed-market international shares (with the United States the largest weight), at 0.18% p.a.. On a $10,000 portfolio split evenly, the combined management fee would be approximately $13 per year. Both are Vanguard funds. Australian companies with international revenue mean the two are not entirely separate exposures. Past performance is not a reliable indicator of future returns. This is general information only and does not constitute a recommendation to invest in any of the above ETFs.
2. A200 + BGBL
A200 tracks the Australia 200, at 0.04% p.a.. BGBL tracks developed-market global shares, at 0.08% p.a.. On a $10,000 portfolio split evenly, the combined management fee would be approximately $6 per year, among the lowest for a two-fund structure on the ASX. Both are Betashares funds. Past performance is not a reliable indicator of future returns. This is general information only and does not constitute a recommendation to invest in any of the above ETFs.
3. VAS + IVV
VAS covers large Australian companies, at 0.07% p.a.. IVV tracks the S&P 500, at 0.04% p.a., which is US-only rather than global. On a $10,000 portfolio split evenly, the combined management fee would be approximately $6 per year. This pairing concentrates the international sleeve in the United States, so it excludes Europe, Japan and other developed markets that a global fund such as VGS or BGBL would include. Past performance is not a reliable indicator of future returns. This is general information only and does not constitute a recommendation to invest in any of the above ETFs.
4. A200 + VGS
This is a mixed-issuer pairing: A200 from Betashares at 0.04% p.a. for Australian shares, and VGS from Vanguard at 0.18% p.a. for developed-market global shares. On a $10,000 portfolio split evenly, the combined management fee would be approximately $11 per year. Some investors hold funds from different issuers; the coverage is similar to VAS + VGS, with a slightly different Australian index. Past performance is not a reliable indicator of future returns. This is general information only and does not constitute a recommendation to invest in any of the above ETFs.
Overlap between Australian and international ETFs
Pairing a domestic fund with an international fund does not always eliminate concentration. Large Australian companies such as the major miners and banks earn significant revenue overseas, so an Australian shares ETF already carries some indirect global exposure. On the international side, global funds are heavily weighted to the United States and to a small number of very large technology companies, which can mean concentration at the top regardless of the domestic holding. The overlap between two Australian broad-market funds such as VAS and A200 is approximately 94%, because they track similar large-cap indices. You can check the overlap between any two ETFs with the free ETFLens overlap checker before you invest. This is general information only.
What allocation split do some investors use?
Some Australian investors discuss a split of approximately 30% to 40% domestic and 60% to 70% international, often citing a preference for franking credits on the Australian side balanced against broader diversification offshore. Others weight more heavily to Australia for the franking benefit, or more heavily international for global diversification. The appropriate allocation depends on individual circumstances including tax situation, income, existing superannuation, and investment goals. This is general information only. Consider speaking with a licensed financial adviser about your personal situation.
Tax considerations
Australian shares ETFs may pass through franking credits attached to dividends from Australian companies that have paid Australian company tax, which can reduce tax payable or, for some investors, result in a refund. You can estimate this with the ETFLens Franking Credits calculator. International shares ETFs generally do not carry franking credits; they tend to carry foreign source income instead, and may involve foreign withholding tax. Tax outcomes vary by marginal rate and by the structure you hold the investment in, such as a personal name, a trust, or superannuation. Past performance is not a reliable indicator of future returns. This is general information only and does not constitute tax or financial advice.
Frequently asked questions
Is a two-ETF portfolio enough diversification? A two-ETF portfolio of Australian and international shares can hold thousands of underlying companies across many countries and sectors. Whether that is enough depends on your goals, time horizon and view on asset classes such as bonds. This is general information only, not financial advice.
What is the difference between VAS and A200? VAS tracks the S&P/ASX 300 and A200 tracks the Australia 200, so both cover large Australian companies with substantial overlap. The main differences are the index, the fee (0.07% p.a. versus 0.04% p.a.) and the issuer. This is general information only.
Should I include bonds in my portfolio? Whether to include bonds depends on factors such as your time horizon, income needs and tolerance for volatility. This is general information only. Asset allocation decisions depend on individual circumstances. Consider speaking with a licensed financial adviser.
How do I check the overlap between my ETFs? You can use the free ETFLens overlap checker to see how much two ETFs share in common before you invest. It compares reported holdings and shows an estimated overlap percentage. This is general information only.
For a worked comparison of two all-in-one diversified funds, see VDHG vs DHHF. Before committing to any combination, check the overlap between the funds you are considering with the ETFLens overlap checker.
This article provides general information about portfolio construction approaches discussed by Australian investors. It does not constitute financial advice and does not consider your personal circumstances, financial situation, or investment objectives. Past performance is not a reliable indicator of future returns. Before making any investment decisions, consider reading the relevant product disclosure statements and target market determinations, and consider speaking with a licensed financial adviser.