The 2-ETF portfolio has held up well. A 30/70 mix of VAS and VGS returned 63.2% over five years to 30 September 2026, ahead of both DHHF (55.4%) and VDHG (45.0%). But a cheaper pair, A200 and IVV, returned 73.4% for a quarter of the fee. The approach is sound; the funds you pick, the split, and the gaps it leaves are where the real decisions sit.
What is the 2-ETF portfolio?
The idea is simple: one ETF for Australian shares and one for global shares. The classic version is VAS plus VGS, often split 30% Australian and 70% global. The two funds share no companies at all, so together they cover well over 1,000 companies across Australia and the developed world for a blended fee of about 0.15% a year.
Its appeal is obvious. It is cheap, transparent and easy to rebalance. VAS and VGS are also Australia's two largest ETFs, with $45 billion between them, and they were the two most popular funds in September 2026.
The numbers: how it compares
| Portfolio | 1 year | 3 years | 5 years | Blended fee |
|---|---|---|---|---|
| VAS + VGS (30/70) | +7.7% | +55.7% | +63.2% | 0.15% |
| A200 + VGS (30/70) | +7.9% | +55.9% | +64.2% | 0.14% |
| A200 + IVV (30/70) | +7.9% | +59.7% | +73.4% | 0.04% |
| A200 + BGBL (30/70) | +8.2% | +58.2% | n/a | 0.07% |
| VAS + VGS + VGAD (30/50/20) | +9.1% | +57.2% | +61.8% | 0.15% |
| DHHF (one fund) | +8.1% | +52.4% | +55.4% | 0.19% |
| VDHG (one fund) | +7.5% | +47.5% | +45.0% | 0.27% |
Cumulative total returns to 30 September 2026, weighted from each fund's return with no rebalancing. Source: TMX Australia monthly funds report.
5-year return of each approach
Three things stand out. The 2-ETF portfolio beat both popular all-in-one funds, largely because DHHF and VDHG hold more in Australian shares, and VDHG also holds bonds. Swapping VAS for A200 made almost no difference. And the US-only version, A200 plus IVV, did best, because US shares led the world over this period.
What changed over the past year
The classic mix vs a version with some hedging
- The Australian dollar rose. That hurt unhedged global funds. Over the past year VGS returned 10.1% while its hedged twin VGAD returned 17.1%. Putting 20% in VGAD would have lifted the portfolio's one-year return from 7.7% to 9.1%.
- Australian shares were flat. VAS returned just 2.2% over the year, so the Australian slice did little.
- Other assets led. Gold, through funds like GOLD, returned 144.5% over five years, and global value shares, through VLUE, returned 46.8% in the past year alone. A 2-ETF portfolio owns no gold and leans towards growth companies.
None of this means the approach is broken. It means a portfolio built for one set of conditions can lag when conditions change. Read more in hedged vs unhedged ETFs.
What VAS and VGS leave out
In a 30/70 VAS and VGS mix, seven US giants are 18%
- Concentration. Seven US technology giants are about a quarter of VGS, or about 18% of the whole 30/70 portfolio. The US is about two thirds of VGS.
- Emerging markets. VGS holds developed markets only, so China, India, Taiwan and Brazil are missing. Funds such as VGE fill that gap.
- Currency choice. Everything global is unhedged, so your returns swing with the Australian dollar.
- Defensive assets. There are no bonds or cash. That suits growth investors, but retirees drawing an income usually need a buffer so they are not forced to sell shares after a fall.
Ways to adjust it
A popular approach is core and satellite: keep a low-cost core of one or two broad funds, then add a few smaller holdings for specific jobs. Some examples, with what they would have done:
- Lower the fee. A200 and BGBL do the same job as VAS and VGS for a blended 0.07% instead of 0.15%. On $500,000 that is about $400 a year.
- Add some hedging. 20% in VGAD added 1.4 points over the past year but cost about 1.4 points over five years. It smooths currency swings rather than adding return.
- Add gold. A 30/60/10 mix of VAS, VGS and GOLD returned 70.2% over five years, but just 6.9% over the past year, when gold barely moved.
- Add emerging markets. 10% in VGE would have lowered the five-year return to 59.0%. Diversification doesn't always pay in every period.
Blended fee for each approach
Before adding satellites, check you aren't doubling up with our overlap calculator → See also how to build a satellite portfolio.
When the 2-ETF portfolio makes sense
- It suits investors who want a cheap, simple growth portfolio they will rebalance once a year and otherwise leave alone.
- An all-in-one fund suits investors who would rather not rebalance at all. DHHF and VDHG do it for you, at a slightly higher fee. See VGS vs DHHF.
- A broader mix suits investors who want emerging markets, some hedging or defensive assets, especially those approaching or in retirement.
Compare the core pair yourself: VAS vs VGS or VGS vs BGBL.
Common questions
Is VAS and VGS a good portfolio?
It has been a good, low-cost core. A 30/70 split returned 63.2% over five years to 30 September 2026, ahead of DHHF and VDHG. It leaves out emerging markets, bonds and currency hedging, which some investors add.
What is the best split between VAS and VGS?
There is no single answer. 30/70 is common; investors who want more franked income often hold 40 to 50% in Australian shares. Over the past five years a higher global weighting returned more, but that won't always be the case.
Is DHHF better than VAS and VGS?
DHHF returned less over five years (55.4% vs 63.2% for a 30/70 mix) but includes emerging markets and rebalances itself. It suits investors who want one fund and no maintenance.
How many ETFs should I own?
For many investors two to five is enough. More funds only help if each one adds something different, so check overlap before adding.
Joshua Stega is a financial adviser with 20 years' experience and the founder of ETF Adviser. He built ReviewETF to make every Australian ETF easy to find and compare.
General information only. It does not take into account your objectives, financial situation or needs. Consider the PDS and TMD before investing. Past performance is not a reliable indicator of future performance. Data as at 30 September 2026.