Today, we are sitting down with ETF Adviser—a financial adviser with over 20 years in investment markets, who specializes in ETF investment through his subscription service at etfadviser.com.au.
Q: How have ETFs changed over the last 20 years?
🗣️A: When I started, we had a handful of market index-focused ETFs, like STW (SPDR S&P/ASX 200) and a few sector-related ones like GDX (VanEck Gold Miners). But we didn’t have any diversified ETFs like VDGR (Vanguard Diversified Growth Index ETF), and very few covering international markets, sectors, or themes.
The game-changers were the introduction of diversified all-in-one ETFs like VDGR and VDHG in 2017, which let investors quickly replicate conservative, balanced, growth, or high-growth allocations with a single holding—70% growth assets and 30% defensive in VDGR's case, for example. The explosion in international exposure (e.g., VGS for global shares) and thematic/sector options has been huge.
A massive acceleration happened after COVID. The pandemic triggered huge volatility in early 2020, but it also sparked a retail investing boom—fueled by stimulus, lockdowns pushing people online, and greater awareness of low-cost, easy-access investing. From around $71 billion in assets in 2020, the Australian ETF market exploded to over $330 billion by the end of 2025, with record net inflows (e.g., $53 billion in 2025 alone) and the number of ASX-listed ETFs surging from roughly 200-220 pre-2020 to over 460 today. We've gone from limited local index trackers to a sophisticated ecosystem with active, smart beta, and thematic funds, plus more issuers competing to drive down costs and expand choices.
Q: When did your lightbulb moment come with ETFs?
🗣️A: My real lightbulb moment came in late 2024 when the first defence-themed ETFs listed on the ASX. I'd been following the defence sector's strong run overseas—driven by geopolitical tensions and rising global spending—but there was no straightforward way for Australian investors to access it via ETFs.
Historically, when a hot new theme or sector finally got an ETF listing here, it often came after a long delay due to regulations and listing approvals, which meant the theme was already peaking or near its top. You'd be able to finally buy an Aussie listed ETF just as momentum faded.
But the defence ETFs broke that pattern. VanEck's DFND listed first in September 2024, quickly followed by Betashares' ARMR and Global X's DTEC in early October—three solid options in rapid succession. Timing-wise, it turned out to be an excellent entry point into the theme, as the sector continued to perform strongly into 2025 and beyond.
For me, that was a clear sign the Australian ETF market has matured. Increased competition among issuers, faster product development, and better alignment with global trends mean we're now getting high-quality, timely opportunities. It reignited my excitement about ETFs and reinforced how powerful they can be for capturing emerging themes without the old timing pitfalls.
Q: Why did you choose to focus on ETFs with your subscription service?
🗣️A: The Australian ETF scene has exploded—there are now over 450 ETFs trading across the ASX and Cboe, from broad-market staples to cutting-edge thematics. If you're not keeping a close eye on developments, it's incredibly easy to miss out on some of the best opportunities out there.
Take the recent winners: defence ETFs that captured the geopolitical surge, gold miners riding commodity waves, or even South Korea exposure during its tech rebound, all of these options posted over 100% returns in a relatively short space of time. These weren't always obvious plays, but they delivered serious outperformance for those who spotted them early.
That's the beauty of ETFs—they're far more forgiving than picking individual stocks. You get instant diversification, rock-solid liquidity right on the ASX, ultra-low fees, and easy trading like any share. Meanwhile, the pool of direct ASX-listed companies has been quietly shrinking (down to around 1,800-1,900 these days, with delistings, mergers, and fewer fresh IPOs outpacing new listings in some years).
ETFs are quickly becoming the smarter, more efficient way for everyday investors to access markets, sectors, and global themes without the headache.
Q: Are Aussie investors using ETFs effectively?
🗣️A: Not as strategically as they could be—and the proof is staring us in the face when you look at the biggest ETFs by assets under management. As of early 2026, the Vanguard Australian Shares Index ETF (VAS) is still comfortably the largest, sitting at around $23.5 billion and tracking just the local S&P/ASX 300. That's a textbook sign of ongoing home bias: many investors are loading up heavily on Australian equities through ETFs, even though our market makes up only about 2% of global equities.
We've seen this home bias for decades—retail investors often allocate 50-70% or more to local shares, far above the global market weight, exposing portfolios to concentration risks in a handful of sectors and companies. Over the long run (e.g., the past decade), global shares have often outperformed Australian ones (even after franking credits), yet many stick local out of familiarity or comfort.
The encouraging flip side? Momentum is building the other way. Global equity ETFs like Vanguard's VGS (MSCI International Shares, now ~$14 billion AUM) and iShares' IVV (S&P 500, ~$12-13 billion) are firmly in the top tier and pulling strong inflows—international funds captured the lion's share of new money in recent years (e.g., over $20 billion in 2025 alone for global equities vs. ~$13 billion for domestic).
The next big evolution I'd love to see: more investors layering in thematic and sector ETFs to capture high-growth future trends. Prime examples include:
XMET (Global X Battery Tech & Lithium) and GMTL (Global X Green Metal Miners) for the critical minerals and clean energy transition boom.
FOOD (Global X Agribusiness) for food security and sustainable agriculture.
FUEL (Global X Clean Energy) for the renewables shift.
ROBO (ROBO Global Robotics & Automation) for AI, automation, and robotics.
ASIA (Betashares Asia Technology Tigers) for explosive Asian tech and emerging market growth.
Q: What are some things people don’t understand about ETFs?
🗣️A: One big one is how trading actually works behind the scenes—many assume ETFs trade just like regular shares, but there's a key player: the market maker. The ETF issuer creates the fund and manages the underlying holdings, but on the ASX, your buys and sells are facilitated by a market maker (usually a big bank or trading firm). Their job is to provide continuous quotes (bid and ask prices) and liquidity so you can trade anytime during market hours. They're in it to make a profit, so they build in a spread—the difference between the buy and sell price—which is essentially their edge.
That spread can vary, and it's often wider in less liquid or niche ETFs. A common mistake is trading right at market open: avoid the first 15-30 minutes as market makers need time to get accurate pricing on the underlying assets. Early trades often see wider spreads, more volatility, and potential slippage—meaning you pay more (or get less) than you expected. Wait for the market to settle, and you'll usually get tighter pricing and better execution.
Another common misunderstanding: just because two ETFs have similar names or target the same sector/theme doesn't mean they hold the same things. A classic example is resources ETFs like QRE (BetaShares S&P/ASX 200 Resources Sector ETF) and MVR (VanEck Australian Resources ETF). Both give exposure to Aussie miners and energy plays, but the weightings and exact mix are different—QRE is more concentrated (e.g., heavier on BHP at ~35%, top holdings dominate), while MVR spreads it out more broadly across materials, energy, and utilities with lower single-stock concentration.
It's like buying a burger from McDonald's versus Hungry Jack's: both are "burgers," but the ingredients, portion sizes, sauces, and overall taste vary a lot. One might fit your preferences (or portfolio needs) better—maybe lower fees, different sector tilts, or better liquidity. Always do your research using a service like reviewet.com.au to quickly compare current holdings, sector breakdowns, and costs before deciding which ETF is right for your portfolio.
Q: What is the single best way to use ETFs in your portfolio?
🗣️A: The single best way? Use them to tap into the 98% of the world's stock market investments that simply aren't available on the ASX.
Australia's share of global equities is tiny—around 1.6-2% of total world market capitalization in 2026. That means the ASX gives you exposure to just a narrow slice: heavily concentrated in banks, miners, and a handful of big names. Great for dividends and franking credits, sure, but it leaves you missing out on the vast majority of global growth engines—like US tech giants (Apple, Nvidia, Microsoft), European industrials, Japanese innovators, emerging Asian tech, and thousands of other companies driving worldwide progress.
ETFs make accessing that other 98% effortless and cheap. A single holding like VGS (Vanguard MSCI International Shares) or IVV (iShares S&P 500) instantly gives you broad, diversified exposure to developed markets ex-Australia, covering the heavy hitters in the US and beyond.
Q: Can you build an entire portfolio using ETFs and if so how?
🗣️A: Yes—you can build a complete, effective portfolio entirely with ETFs, and it's often simpler, cheaper, and less risky than piecing one together with individual shares.
The most straightforward and popular way is the core/satellite model:
Core (60-85% of your portfolio): Broad, low-cost, diversified ETFs that form a stable foundation, delivering market-like returns with minimal effort. These are your "set-and-forget" holdings for long-term growth and resilience.
A great single-ETF core option is VDGR (Vanguard Diversified Growth Index ETF)—it automatically handles diversification with ~70% in growth assets (Australian and international shares) and ~30% in defensive/income assets (bonds, fixed interest), rebalancing itself along the way. It's ideal for moderate-risk investors wanting hands-off balance in one holding.
Satellite (15-40%): Smaller, targeted ETFs to add potential extra returns or align with your views on future trends. Keep these limited to control risk—think of them as "spices" enhancing the core. Examples: defence (DFND/ARMR/DTEC), clean energy (FUEL), AI/robotics (ROBO), Asian tech (ASIA), or critical minerals (XMET/GMTL).
When you think about it, building a portfolio with individual shares is far more difficult—researching dozens of companies, managing concentration risks, and dealing with emotional decisions—yet many people do it every day. ETFs reverse that: one trade gives you hundreds or thousands of holdings, ultra-low fees (often 0.07-0.27%), ASX liquidity, and easy dollar-cost averaging.
Q: When is the right time to buy an ETF? When is the right time to sell?
🗣️A: Timing isn't about predicting the market—it's about using proven patterns to stack the odds in your favor. My approach relies on the Base and Trend model combined with the Volatility Contraction Pattern (VCP) for satellite positions.
In the Base and Trend model, ETFs (like stocks) move in cycles: they build a "base" (period of consolidation after an advance, shaking out weak holders), then break out into a strong "trend" phase where price advances with momentum. The best buys come early in that trend—spotting the breakout from the base when volume picks up and price clears resistance. This gives better risk/reward than chasing late-stage moves.
In terms of selling, I always use stop losses for initial entries (because we can never get all our calls right), and then take profits in key ETFs once they run out of momentum and start breaking key moving averages. In my satellite model portfolio I will be more active, while the core portfolio I try to hold for the long term and only reduce exposure if our signals suggest we are entering into a bear market correction.
You can see how I operate by signing up at HERE and I offer a free 30 day trial.
Q: What are the biggest risks you see in ETF’s right now, and how do you mitigate these?
🗣️A: Right now (March 2026), the two biggest risks in Australian ETF portfolios are currency exposure (especially unhedged international holdings) and index allocation/concentration (market-cap weighting and home bias).
Currency risk is front and centre: the AUD has bottomed after a long slide, and a rebound (even gradual) will drag on unhedged global returns. Most popular core ETFs (VDGR, VDHG, DHHF etc.) are fully unhedged, so heavy international weightings get punished when the dollar strengthens.
Index allocation risk comes from passive market-cap weighting: ETFs load up on yesterday's winners (mega-cap tech in VGS/IVV, stretched valuations), creating concentration vulnerabilities during rotations. Home bias piles on more risk—many Aussies still overload VAS or local-focused funds, amplifying exposure to banks, miners, and a narrow market.
Mitigation is straightforward:
Currency: Tilt satellites toward hedged versions (IHVV for US, HNDQ for Nasdaq, VGAD for global) or AUD-resilient themes (resources, commodities via XMET, PICK).
Concentration: Keep the core broad and simple, but use satellites for active tilts—equal-weighted, factor-based, or thematic ETFs to catch emerging rotations rather than chase past leaders.
Q: What does your current best ideas satellite portfolio look like?
🗣️A: As we stand here in March 2026, the best ideas model portfolio I run as part of my subscription service is deliberately overweight hard assets—a position that's worked well amid the ongoing commodity strength and momentum in materials/mining plays (think broad resources ETFs like QRE or MVR, plus critical minerals exposure via XMET or similar).
This tilt reflects my view that we are shifting from a market that favored asset light businesses like tech stocks, to asset heavy businesses like commodities and energy.
I'm actively looking to build more exposure to energy (e.g., hedged oil plays like OOO or transition/clean energy options) and soft commodities (agribusiness/food security themes via FOOD or broader commodity baskets). These areas look poised for upside with potential supply constraints, inflation dynamics, and shifting geopolitical factors.
Q: Where do you see the ETF market in 5 years?
🗣️A: In five years (by 2031), I expect the Australian ETF market to be significantly larger, more mature, and even more investor-friendly.
We'll likely see 600–800+ ETFs listed (from ~450 today), with assets easily surpassing $600–800 billion as inflows continue at record pace. The big growth drivers will be:
A flood of new thematic and sector ETFs—think deeper exposure to AI, robotics, clean energy transition, biotech, cybersecurity, defence, critical minerals, and emerging markets themes that are just starting to gain traction now.
More active, smart beta, and factor-based options as issuers compete harder and costs keep falling.
Greater maturity: tighter spreads, better liquidity even in niche products, faster product launches (less of the old "theme peaks before listing" delay), and more all-in-one diversified or target-date style ETFs for hands-off investors.
Overall, ETFs will become the default choice for most retail and self-directed investors—cheaper, simpler, and more powerful than picking individual stocks or traditional managed funds. The market will feel less like a "new" space and more like an established, sophisticated ecosystem. For Aussies, that means easier access to global growth and themes without leaving the ASX.
Q: What would you say to anyone who hasn’t yet invested in ETFs?
🗣️A: If you haven’t started with ETFs yet, here’s the simple truth: they’re one of the easiest, lowest-cost ways to invest properly and build wealth over time—especially for everyday Australians.
Most people still try to pick individual stocks, which is hard, time-consuming, and risky: you need to research dozens of companies, watch earnings, manage concentration, and fight emotions when things go wrong. ETFs solve that in one move.
