Best ETFs for Retirees in Australia (2026)
In retirement you typically need three things from your portfolio: income, growth to keep up with inflation, and a safe bucket to draw on when markets fall. These are the ETFs most often used for each job.
It depends on the job you need the ETF to do. Here are the biggest and cheapest in each group:
- Income from Australian shares: VHY is the largest ($8.2bn) and SYI the cheapest (0.20% a year).
- Growth that doesn't swing as much: VDGR is the largest ($1.6bn) and also the cheapest (0.27% a year).
- The safe bucket: cash and bonds: AAA is the largest ($5.1bn) and BILL the cheapest (0.07% a year).
Data to 30 September 2026 from the TMX Australia funds report. Returns include distributions. Yields are distributions over the past 12 months, adjusted down where they included one-off capital gains. General information only, not a recommendation.
All the options compared
Income from Australian shares
Higher-yielding Australian companies, with franking credits that pension-phase accounts can claim back as cash.
| Code | ETF | Fee | Size | Yield | 1Y | 5Y a year | Spread |
|---|---|---|---|---|---|---|---|
| VHY | Vanguard Australian Shares High Yield ETF | 0.25% | $8.2bn | 3.5% | +12.0% | +10.2% | 0.02% |
| SYI | State Street SPDR MSCI Australia Select High Dividend Yield ETF | 0.20% | $739m | 3.8% | +14.8% | +9.5% | 0.06% |
| IHD | iShares S&P/ASX Dividend Opportunities ESG Screened ETF | 0.23% | $407m | 4.2% | +8.8% | +8.8% | 0.11% |
| RDV | Russell Investments High Dividend Australian Shares ETF | 0.34% | $342m | 4.1% | +1.9% | +7.0% | 0.08% |
| ZYAU | Global X S&P/ASX 200 High Dividend ETF | 0.24% | $100m | 4.7% | +10.7% | +4.8% | 0.16% |
Growth that doesn't swing as much
Diversified funds with some bonds.
| Code | ETF | Fee | Size | Yield | 1Y | 5Y a year | Spread |
|---|---|---|---|---|---|---|---|
| VDGR | Vanguard Diversified Growth Index ETF | 0.27% | $1.6bn | 4.0% | +5.6% | +5.9% | 0.03% |
| VDBA | Vanguard Diversified Balanced Index ETF | 0.27% | $942m | 3.0% | +3.7% | +4.0% | 0.06% |
| VDCO | Vanguard Diversified Conservative Index ETF | 0.27% | $297m | 3.0% | +2.3% | +2.5% | 0.08% |
The safe bucket: cash and bonds
Somewhere to hold one to three years of spending, so you're not forced to sell shares in a downturn.
| Code | ETF | Fee | Size | Yield | 1Y | 5Y a year | Spread |
|---|---|---|---|---|---|---|---|
| AAA | Betashares Australian High Interest Cash ETF | 0.18% | $5.1bn | 4.1% | +4.1% | +3.2% | 0.02% |
| VAF | Vanguard Australian Fixed Interest Index ETF | 0.10% | $3.9bn | 3.2% | −0.4% | −0.1% | 0.04% |
| IAF | iShares Core Composite Bond ETF | 0.10% | $3.7bn | 3.2% | −0.4% | −0.2% | 0.02% |
| QPON | Betashares Australian Bank Senior Floating Rate Bond ETF | 0.22% | $2.4bn | 4.4% | +4.6% | +3.8% | 0.04% |
| BILL | iShares Core Cash ETF | 0.07% | $1.3bn | 4.0% | +4.0% | +3.1% | 0.02% |
Compare the biggest side by side → · Check how much they overlap →
Spread is the average gap between the buy and sell price: lower is cheaper to trade. 5Y a year is the average yearly total return over five years. Past performance is not a reliable indicator of future performance.
How closely each ETFs for retirees tracks its index
An index fund should return its index, less its fee. The gap below is each fund's return after fees minus its own benchmark. A gap close to zero means it has done its job well. Over 5 years, AAA tracked its index most closely, beating it by 0.13% a year.
| ETF and benchmark | Fee | 1Y gap | 3Y gap a year | 5Y gap a year | Verdict |
|---|---|---|---|---|---|
| AAA30-day BBSW (benchmark) | 0.18% | +0.12% | +0.15% | +0.13% | Ahead of its index |
| BILLS&P/ASX Bank Bill Index | 0.07% | +0.09% | +0.09% | +0.06% | Ahead of its index |
| VAFBloomberg AusBond Composite 0+ Yr Index | 0.10% | -0.08% | -0.08% | -0.09% | Tracking well |
| IAFBloomberg AusBond Composite 0+ Yr Index | 0.10% | -0.08% | -0.08% | -0.10% | Tracking well |
| QPONSolactive Australian Bank Senior Floating Rate Bond Index | 0.22% | -0.12% | -0.13% | -0.10% | Tracking well |
| VDCOVanguard composite benchmark (weighted indexes) | 0.27% | -0.20% | -0.21% | -0.23% | Tracking well |
| VHYFTSE Australia High Dividend Yield Index | 0.25% | -0.28% | -0.26% | -0.27% | Tracking well |
| VDBAVanguard composite benchmark (weighted indexes) | 0.27% | -0.22% | -0.26% | -0.30% | Tracking well |
| IHDS&P/ASX Sustainability Screened Dividend Opportunities Index | 0.23% | -0.27% | -0.29% | -0.35% | Tracking well |
| RDVRussell Australia High Dividend Index | 0.34% | -0.24% | -0.37% | -0.35% | Tracking well |
| VDGRVanguard composite benchmark (weighted indexes) | 0.27% | -0.29% | -0.36% | -0.37% | Tracking well |
| SYIMSCI Australia Select High Dividend Yield Index | 0.20% | -0.49% | -0.37% | -0.43% | Lagging its index |
Gap = fund return after fees minus its benchmark. Issuer figures to October 2026. Hedged funds are measured against the hedged version of their index. Funds without published benchmark figures are left out. See every ETF vs its benchmark →
What to consider
- Don't chase yield alone. The highest-yielding funds can be concentrated in a few banks and miners.
- Franking credits can add 1% or more a year to the income from Australian shares in a pension account.
- Sequence risk. A big fall early in retirement does the most damage. A cash and bond bucket means you don't have to sell shares at the bottom.
- Model it. Use our retirement income calculator to see how long your money could last.
