Many Australian investors are heavily overweight domestic shares — often 50% or more of their portfolio. The reasons are familiar: franking credits, dividends, familiarity, and the comfort of owning companies you know. But Australia represents just 2% of global stock market capitalisation. By overweighting Australia, you're making a concentrated bet on banks and miners while missing the technology, healthcare, and consumer companies that have driven global returns.
We compared 15 years of actual ETF returns — STW (ASX 200), IVV (S&P 500), and IOO (Global 100) — to answer the question: does the data support an Australian bias?
15 Years of Calendar Year Returns
Over 15 calendar years (2011–2025), the S&P 500 (in AUD) beat the ASX 200 in 11 out of 15 years. Australia won just 4 — 2012, 2017, 2022 (when global tech crashed), and 2025 (when the AUD rallied).
Year | ASX 200 | S&P 500 (AUD) | Winner | Margin |
|---|---|---|---|---|
2011 | -11.4% | +5.0% | US | +16.4% |
2012 | +18.8% | +16.0% | AU | +2.8% |
2013 | +19.7% | +35.0% | US | +15.3% |
2014 | +5.0% | +24.0% | US | +19.0% |
2015 | +3.8% | +9.5% | US | +5.7% |
2016 | +11.6% | +14.5% | US | +2.9% |
2017 | +12.5% | +12.0% | AU | +0.5% |
2018 | -3.5% | +3.5% | US | +7.0% |
2019 | +24.1% | +28.0% | US | +3.9% |
2020 | +3.6% | +9.0% | US | +5.4% |
2021 | +17.7% | +36.4% | US | +18.7% |
2022 | -3.0% | -12.5% | AU | +9.5% |
2023 | +13.0% | +25.2% | US | +12.2% |
2024 | +11.4% | +37.4% | US | +26.0% |
2025 | +10.4% | +9.2% | AU | +1.2% |
The years when Australia won were modest — margins of 0.5% to 9.5%. The years when the US won were often blowouts — 15%, 19%, 26% margins. The US wins were bigger and more frequent.
Returns Across Every Time Horizon
Time Horizon | STW (ASX 200) | IVV (S&P 500) | IOO (Global 100) | Winner |
|---|---|---|---|---|
1 year | +15.5% | +3.5% | +12.2% | Australia |
3 years | +38.2% | +68.0% | +86.6% | Global |
5 years | +57.4% | +107.0% | +127.9% | Global |
10 years | ~100% | ~314% | ~280% | Global |
Australia wins over 1 year — driven by the AUD rally that punished unhedged US returns. But over 3, 5, and 10 years, the US and global markets have comprehensively outperformed.
The 10-year numbers are extraordinary: $100K in STW became ~$200K. The same $100K in IVV became ~$414K. That's a $214K difference on the same starting amount.
Why Australia Underperforms: Two Very Different Markets
The ASX and the global market look nothing alike:
Sector | ASX 200 | MSCI World | Difference |
|---|---|---|---|
Financials | 34% | 17% | AU 2x overweight |
Materials | 24% | 4% | AU 6x overweight |
IT / Technology | 3% | 24% | AU 8x underweight |
Healthcare | 7% | 12% | AU underweight |
Consumer Disc. | 6% | 11% | AU underweight |
Industrials | 7% | 11% | AU underweight |
The ASX is a banks-and-miners market. 58% of the ASX 200 is financials and materials. The rest of the world is led by technology (24%), healthcare (12%), and consumer companies (11%) — sectors that barely exist on the ASX.
When you buy VAS or A200, you're betting that banks and miners will outperform. When you buy VGS or IVV, you're getting Apple, Microsoft, Nvidia, Amazon, and the companies shaping the global economy. Over the past decade, technology has been the dominant driver of returns — and Australia has almost none of it.
The ASX Is Shrinking
The number of companies listed on the ASX has been declining since 2022. From a peak of 2,239 entities in 2022, the ASX has lost 217 listings — the largest decline since the early 1990s recession.
This isn't just small speculative companies leaving. Large, profitable enterprises like Sydney Airport, CSR, Newcrest Mining, and Suncorp Bank have been taken private or acquired. According to ASIC's Report 807, quality, maturity, and diversity on the ASX are in decline.
Meanwhile, the US market continues to attract the world's most innovative companies. Australian investors who limit themselves to domestic shares are fishing from a shrinking pond.
The Franking Credit Argument
The most common argument for overweighting Australian shares is franking credits. Fully franked dividends effectively boost after-tax returns by passing through the company tax already paid.
For a retiree in pension phase paying 0% tax, a $1 dividend with a 30-cent franking credit is worth $1.30 in pre-tax terms — a meaningful benefit.
But does it close the performance gap?
Metric | ASX 200 (STW) | S&P 500 (IVV) |
|---|---|---|
5-year total return | +57.4% | +107.0% |
Distribution yield | ~3.5% | ~1.2% |
Franking credit value (approx) | ~1.5% p.a. extra | 0% |
Effective yield after franking | ~5.0% | ~1.2% |
5-year return gap | — | +49.6% ahead |
Franking credits add roughly 1.5% p.a. to Australian share returns for investors who can claim them. Over 5 years, that's approximately 7.5% extra. But the S&P 500 outperformed the ASX 200 by 49.6 percentage points over the same period. Franking credits don't come close to bridging that gap.
Even for retirees who value franking credits highly, the data suggests the optimal approach is to hold enough Australian shares to capture franking benefits (30–40% of portfolio), not to go all-in on Australia at the expense of global growth.
Australia's Place in the World
Australia represents approximately 2% of global stock market capitalisation. Yet many Australian investors allocate 50–70% of their equity portfolio domestically. This is known as "home bias" — and it's one of the most well-documented behavioural biases in investing.
Market | Share of Global Market Cap | What You Get |
|---|---|---|
United States | ~60% | Tech, healthcare, consumer, financial |
Europe | ~15% | Luxury, industrial, pharma, financial |
Japan | ~6% | Auto, tech, industrial |
UK | ~4% | Energy, pharma, financial |
China | ~3% | Tech, consumer, industrial |
Australia | ~2% | Banks, miners |
Rest of world | ~10% | Diversified |
By allocating 50%+ to Australia, you're dramatically overweighting a 2% market and underweighting the other 98%. You're betting on banks and miners over technology and healthcare. The last 15 years show that hasn't been the winning bet.
The Verdict
➡️Australia won in 4 out of 15 years. Over every multi-year time horizon (3, 5, 10, 15 years), global and US shares have materially outperformed.
➡️Franking credits help but don't close the gap. The ~1.5% p.a. franking benefit is meaningful for retirees but is dwarfed by the 5-10% p.a. performance gap between Australian and global shares over the past decade.
➡️The ASX is structurally limited. 58% financials and materials, 3% technology, and a shrinking number of listed companies. It's a concentrated bet on two sectors, not a diversified equity market.
➡️The data supports a global bias with Australian exposure. A 30/70 (AU/Global) or 40/60 split captures franking credits and domestic income while getting the growth that global markets deliver. Going 50%+ to Australia has cost investors real money over the past 15 years.
Research every ETF mentioned in this article on ReviewETF — compare fees, performance, and holdings across all 464 ASX-listed ETFs.
Sources: CBOE Australia Monthly Funds Report (February 2026), BlackRock (IVV performance data), S&P Dow Jones Indices (25 Years of S&P/ASX Indices), MSCI (World Index sector weights), ASX Annual Reports, ASIC Report 807, Market Index (historical ASX returns), ReviewETF.com.au.
No fund manager wrote this article. No issuer is paying for placement. This is independent analysis based on publicly available data.
This article is general information only and does not constitute financial advice. Consider your own circumstances and seek professional advice before making investment decisions.
