The Index Behind the ETF: What's Actually Inside the 10 Most Popular ASX ETFs
Every ETF on the ASX exists for one reason: to track an index. Most investors stop there. They look at the ticker, check the fee, and buy.
But two ETFs that "track the Australian market" can hold a different number of stocks, weight them differently, screen out different companies, and rebalance on different days. Same headline exposure — different underlying portfolio.
The index is the rulebook. The ETF is just the wrapper that holds whatever the index says to hold. If you don't understand the rulebook, you don't actually understand what you own.
This guide walks through the indexes behind the 10 most popular ETFs on the ASX as at May 2026 — the rules, the rebalance schedules, the caps, the screens, and the structural quirks that issuer marketing material conveniently leaves out. You can compare any two of these funds head-to-head on our ETF compare tool.
Why the Index Matters
Three things change between two ETFs that look identical:
Selection rules — how stocks get into the index in the first place (size, liquidity, sector caps, screens)
Weighting scheme — market cap, modified market cap, equal weight, dividend yield, free-float
Rebalance frequency — quarterly, semi-annually, annually — and on what schedule
These three differences are the entire reason VAS, A200 and IOZ have slightly different performance even though they all track "the Australian market." They're the reason VGS and BGBL diverge slightly, why NDQ behaves the way it does after major rebalances, and why VHY can underperform VAS in some years and crush it in others.
You don't need to be an index nerd. You just need to know what's actually in the box before you buy.
1. S&P/ASX 200 — Behind A200 and IOZ
Funds that track it: A200 ($9.81B AUM), IOZ ($7.41B AUM), STW ($6.01B AUM)
Provider: S&P Dow Jones Indices
Selection rule: The 200 largest and most liquid stocks listed on the ASX, ranked by float-adjusted market capitalisation.
Liquidity filter: Stock must trade enough to be considered "highly liquid" — eliminates tiny illiquid names even if their market cap is large.
Weighting: Float-adjusted market cap. The biggest stocks (CBA, BHP, CSL) get the biggest weight. No caps — that's why CBA can sit at >10% of the index when its share price runs.
Rebalance: Quarterly (March, June, September, December) — but with a committee that can make ad-hoc changes for major corporate actions.
Number of holdings: 200 (by definition).
The quirk no one tells you: The S&P/ASX 200 has an uncapped weighting scheme. When the banks ran in 2024–25, CBA peaked at ~12% of the index — meaning if you owned A200 or IOZ, about 1 in every 8 dollars you'd invested was in a single stock. This is also why these funds can look heavy in financials and materials — they're not screening for diversification, they're just reflecting whatever the market does.
Compare live: A200 vs IOZ vs STW — all three track the same index, so the only meaningful difference is fee (0.04% vs 0.05% vs 0.05%).
2. S&P/ASX 300 — Behind VAS
Funds that track it: VAS ($25.5B AUM)
Provider: S&P Dow Jones Indices
Selection rule: The 300 largest, highly liquid securities on the ASX. Includes the LargeCap, MidCap and SmallCap components of the S&P/ASX index family. Effectively the ASX 200 plus the next 100 smallest.
Weighting: Float-adjusted market cap — same as the ASX 200.
Rebalance: Quarterly.
Number of holdings: Up to 300.
The quirk no one tells you: VAS owns ~100 more stocks than A200, but those extra 100 stocks make up only ~3.5% of the fund. So you're paying for marginal exposure to small-cap Australia. Over the past 5 years VAS and A200 have returned within 0.1% p.a. of each other — the small-cap exposure has been a coin flip.
Why it still matters: If the smaller end of the ASX ever has a sustained run, VAS will benefit slightly more. If you want pure large-cap, A200 or IOZ is structurally cleaner.
Compare live: VAS vs A200 vs IOZ — same market, different index, different fees. See our full VAS vs A200 vs IOZ deep-dive.
3. MSCI World ex-Australia — Behind VGS, MGOC and IWLD
Funds that track it: VGS ($16.4B), IWLD (ESG-screened version, $1.49B), MGOC (active vs same benchmark)
Provider: MSCI
Selection rule: Large- and mid-cap stocks from 23 developed-market countries (everywhere except Australia). About 1,500 holdings.
Liquidity filter: MSCI applies rigorous size and liquidity thresholds; the index is reviewed semi-annually.
Weighting: Float-adjusted market cap. No caps. US dominates at ~72.6% (May 2026).
Rebalance: Semi-annual (May and November) with a quarterly "review" in February and August.
Number of holdings: ~1,500.
The quirk no one tells you: MSCI is the gold standard of global indexes — but it charges issuers more for the licence than competing providers. That's part of why VGS costs 0.18% MER while BGBL (using Solactive instead) charges 0.08%.
Compare live: VGS vs IWLD vs MGOC — same benchmark, three completely different products. See our VGS vs BGBL deep-dive for the head-to-head.
4. Solactive GBS Developed Markets ex-Australia Large & Mid Cap — Behind BGBL
Funds that track it: BGBL ($4.5B)
Provider: Solactive
Selection rule: Same universe as MSCI World ex-Australia — large- and mid-cap stocks from developed markets ex-AU. About 1,300 holdings.
Replication method: Sampling. Unlike VGS which fully replicates MSCI World, BGBL holds a representative subset of the Solactive index. This is part of why the fee is lower (lower trading costs, lower licence fee).
Rebalance: Semi-annual.
Number of holdings: ~1,300 (vs ~1,500 for VGS).
The quirk no one tells you: Solactive is a German index provider that built its business as a low-cost alternative to MSCI. The methodology is functionally similar, but the licence cost is materially lower. Solactive doesn't have a 100-year brand — and some investors (rightly or wrongly) treat that as a risk. In practice, BGBL has tracked MSCI World ex-AU within a fraction of a percent since launch.
5. S&P 500 — Behind IVV, VTS-equivalents and SPY
Funds that track it: IVV ($16.0B), SPY ($0.65B), IVE (Hedged) ($0.4B), IHVV ($1.06B)
Provider: S&P Dow Jones Indices
Selection rule: 500 large-cap US companies. Constituents must be US-domiciled, have an unadjusted market cap of US$14.5B or greater, positive earnings over the most recent quarter AND the most recent four quarters, an investable weight factor of at least 0.10, and trade a minimum of 250,000 shares in each of the last six months.
The committee: Unlike most indexes (which are purely rules-based), the S&P 500 is selected by a committee at S&P Dow Jones Indices. They have discretion. This is why a company like Tesla took years to be added — the committee weighed liquidity, sector balance, and earnings consistency before adding it.
Weighting: Float-adjusted market cap. No formal caps, but sector balance is "considered" in selection.
Rebalance: Quarterly, plus ad-hoc additions/removals for corporate actions.
Number of holdings: 500.
The quirk no one tells you: Earnings positivity is a hard requirement — companies must be profitable to enter. This is why early-stage growth companies often miss out for years even when they're enormous. Tesla, for example, only joined in late 2020 despite being one of the most valuable companies in the world for years before.
Compare live: IVV vs SPY vs VTS — three funds, three different US indexes, three different MERs (0.04% / 0.09% / 0.03%).
6. Nasdaq-100 — Behind NDQ and HNDQ
Funds that track it: NDQ ($8.96B AUM), HNDQ (hedged, $0.89B), LNAS (2x geared, $0.27B)
Provider: Nasdaq
Selection rule: The 100 largest non-financial companies listed on the Nasdaq exchange. Financials are excluded by definition — this is the biggest structural difference between Nasdaq-100 and S&P 500.
Liquidity filter: Each security must have a minimum 200,000 share daily volume over the last 3 months, and trade for at least 3 full months before being eligible (the "seasoning" rule).
Weighting: Modified market cap. Single-stock weights are capped at 22.5%. The aggregate weight of all stocks above 4.5% can't exceed 48% (the "concentration cap"). This is why Nvidia and Apple don't run away to 25%+ of the index — there's a cap.
Rebalance schedule (NEW for 2026): Nasdaq updated the methodology in 2026. Constituents are now reviewed on a rank-based quarterly process in March, June, September and December — not just the historic annual December reconstitution. Plus a "Fast Entry" pathway for new listings ranked in the top 40.
Number of holdings: 100.
The quirk no one tells you: Because financials are excluded, NDQ has zero exposure to banks, brokerages, or insurance. About 60% of the index is tech-adjacent. This is why NDQ ran +30%+ in 2023, 2024 and 2025 while VAS (heavy in banks) lagged — and also why NDQ can have brutal drawdowns when tech corrects. There is no defensive ballast.
Compare live: NDQ vs HNDQ vs LNAS.
7. S&P Global 100 — Behind IOO
Funds that track it: IOO ($3.5B)
Provider: S&P Dow Jones Indices
Selection rule: 100 multinational blue-chip companies of major importance in global equity markets. A subset of the S&P Global 1200.
The "global" reality: About 73% of IOO is US-listed companies, with the rest spread across UK (~7%), Switzerland (~5%), Japan (~3%), Germany (~2.7%). The "global" label is misleading — IOO is mostly US with a thin international veneer.
Weighting: Float-adjusted market cap.
Replication: Representative sampling — does NOT hold all 100 stocks.
Rebalance: Quarterly.
Number of holdings: 102.
The quirk no one tells you: IOO has the same MER as IVV range-wise (0.40%) for a portfolio that is 73% US anyway. If you already own a broad global ETF (VGS or BGBL), IOO is a duplicate exposure at a higher fee. Most ReviewETF deep-dives recommend skipping it.
8. FTSE Australia High Dividend Yield Index — Behind VHY
Funds that track it: VHY ($7.50B)
Provider: FTSE Russell
Selection rule: Starts with the FTSE ASFA Australia 200 (a market-cap-weighted broad-market index — similar to ASX 200), then:
Excludes A-REITs (property trusts are removed entirely)
Ranks remaining stocks by forecast 12-month dividend yield (sourced from I/B/E/S broker estimates — forecast, not historical)
Companies not forecast to pay dividends in the next 12 months are eliminated
Selects high-yield stocks until ~50% of the float-adjusted market cap of the eligible universe is covered
Diversification caps:
Maximum 40% in any single industry
Maximum 10% in any single company
Weighting: Float-adjusted market cap (after the screen).
Rebalance: Semi-annually (June and December).
Number of holdings: ~70.
The quirk no one tells you: VHY uses forecast dividends — not historical dividends. This is genuinely smart. Most "high yield" funds backtest poorly because they end up buying stocks that paid a fat dividend last year before cutting it. By using forward consensus estimates, VHY tries to catch high-yield names before the cut, not after.
The other quirk: REITs are screened out. So VHY won't give you any commercial property dividend exposure — for that you need VAP separately.
For the full dividend ETF landscape, read our Ultimate List of Dividend-Paying ETFs and Australia's Dividend ETFs Exposed.
9. Solactive Australian Bank Senior Floating Rate Bond Index — Behind AAA
Funds that track it: AAA ($5.83B)
Provider: Solactive
Selection rule: Senior floating-rate notes issued by Australian banks. Maturity range tightly bounded. Investment-grade only.
Yield mechanism: Distribution moves with the bank bill swap rate (BBSW) + a small credit spread. As the RBA cash rate moves, AAA's yield moves with it almost in lockstep.
Rebalance: Monthly.
The quirk no one tells you: AAA is not literally cash. It's a portfolio of short-dated bank floating-rate bonds. In a banking-crisis scenario (e.g., a major Aussie bank failure), AAA would lose value temporarily. The risk is low — Aussie banks are some of the safest credits in the world — but it's not zero. This is why the BILL and ISEC alternatives exist; they hold slightly different instrument mixes.
For the full cash-ETF deep-dive, read Best Cash ETFs Australia 2026.
10. Bloomberg AusBond Composite 0+ Yr Index — Behind VAF and IAF
Funds that track it: VAF ($3.31B), IAF ($2.97B)
Provider: Bloomberg
Selection rule: A broad benchmark of investment-grade fixed-income securities issued in Australia: Commonwealth Government bonds, semi-government bonds (state issuers), and AAA-rated corporate/supranational bonds. The "0+ Yr" means all maturities included.
Weighting: Market value weighted — biggest issuers (i.e., the Commonwealth Government) get the biggest weight.
Composition (May 2026): ~50% Commonwealth Government, ~30% semi-government, ~20% corporate/supranational.
Duration: ~6.5 years.
Rebalance: Monthly.
The quirk no one tells you: Both VAF and IAF track the same index. So fee and tracking error are the only meaningful differences (VAF at 0.10%, IAF at 0.15%). VAF is structurally cheaper — there's no good reason to own IAF over VAF in 2026.
Compare live: VAF vs IAF.
What This Tells You
A few patterns emerge once you compare indexes side by side:
Not all "Australian shares" ETFs are equivalent. A200 and IOZ track ASX 200 (200 stocks, no small-cap). VAS tracks ASX 300 (300 stocks, includes small-cap). VHY screens for high yield and excludes property. STW is on the same ASX 200 index as A200 but charges more.
MSCI vs Solactive is a real fee gap. The licence cost difference is one of the reasons BGBL can offer half the MER of VGS for essentially the same exposure.
Committee-selected vs purely rules-based matters. The S&P 500 has a committee. The Nasdaq-100 is purely rules-based. This is why Tesla took years to be added to the S&P 500 (committee discretion on earnings consistency) but joined the Nasdaq-100 the moment it qualified on market cap.
Caps protect you — or they don't. The Nasdaq-100 caps individual stock weight at 22.5% and concentration of top stocks at 48%. The ASX 200 has no caps. This is why CBA can sit at >10% of A200 when the banks run, while no single stock will ever dominate NDQ.
Rebalance schedules drive behaviour. The Nasdaq-100 has switched from annual to quarterly reviews in 2026. The MSCI World rebalances semi-annually. The ASX 200 quarterly. Most cash ETFs monthly. The faster the rebalance, the more responsive the index — but also the higher the internal turnover.
How to Use This
Before you buy two ETFs, check whether they're on the same index. VAS + A200 is essentially the same exposure twice. So is VAF + IAF. So is BGBL + iShares-equivalent. You're paying double the brokerage for no diversification benefit.
Use the index, not the issuer, to compare. Vanguard, iShares, BetaShares, SPDR and Global X all sell broad-market Aussie ETFs. The differentiator isn't the brand — it's the index they're tracking, the fee they're charging, and the rebalance discipline.
Read the methodology document for any thematic ETF you're considering. The "AI" theme ETFs and the "robotics" theme ETFs often hold the same 7 stocks because their indexes are built on similar screens. We covered this in The AI Boom Goes Beyond NDQ.
Check for caps and screens. A "high dividend" ETF that excludes REITs (VHY) gives you different exposure than one that includes them. An "ASX 200" ETF with no industry caps will swing hard with the banks. An "ESG-screened global" ETF will quietly underweight energy.
The Bottom Line
You don't need to memorise every index methodology document. You just need to ask three questions before buying any ETF:
What index is it tracking? (Found on the issuer fact sheet.)
What are the selection rules? (Float-adjusted market cap? Yield screen? Sector cap? Active discretion?)
How often does it rebalance? (Quarterly, semi-annual, monthly — different things change at different speeds.)
The ETF brochure won't tell you any of this in a way that's useful for comparison. The index methodology document — which is publicly available and usually 20–40 pages — will. And once you know which index your money is actually tracking, you can run any two funds through the Compare ETFs tool and see exactly how they stack up.
The index is the product. The ETF is just the delivery vehicle.
Related Reading on ReviewETF
Sources
S&P Dow Jones Indices (S&P/ASX index family methodology, S&P 500 methodology, S&P Global 100 methodology); MSCI (MSCI World ex-Australia methodology); Nasdaq (Nasdaq-100 Index methodology 2026 update); FTSE Russell (FTSE Australia High Dividend Yield methodology); Solactive (GBS Developed Markets ex-Australia methodology); Bloomberg (AusBond Composite Index methodology); issuer factsheets (Vanguard, BetaShares, iShares, Global X, State Street SPDR, VanEck — May 2026); CBOE Australia Monthly Funds Report (May 2026); ReviewETF.com.au.
No fund manager wrote this article. No issuer is paying for placement. All data as at 31 May 2026.
This article is general information only and does not constitute financial advice. Consider your own circumstances and seek professional advice before making investment decisions.
