Ask almost any Australian finance influencer how to invest and you'll hear the same thing: buy VAS and VGS, go 30/70, and you're done. To be fair, that portfolio has worked incredibly well for the past 15 years. But does it still make sense in 2026?
I crunched the numbers, looked at what's changed over the past 18 months, and asked one question: is this still the best beginner portfolio in Australia? Tap any button to jump to that part of the video.
VAS + VGS is still a solid, simple, low-cost portfolio, especially for beginners. But it was built for a world of falling rates, a weak Aussie dollar and US tech dominance, and that world has changed. Keep a diversified core, and consider using satellites to cover what it misses.
What is the VAS + VGS portfolio?
- VAS: Vanguard's Australian shares ETF. The top 300 ASX companies, including CBA, BHP, CSL, the big banks and miners.
- VGS: Vanguard's international shares ETF. Around 1,300 companies in developed markets, mostly the US: Apple, Microsoft, Nvidia and more.
The classic split is 30% VAS, 70% VGS. Australia is less than 2% of world share markets, so VGS gives you much broader exposure. The combined fee is around 0.15% a year. Simple, cheap and diversified, which is why it became so popular.
The numbers
Over five years, the simple two-ETF approach clearly worked. But over the past 12 months, the portfolio everyone recommends lagged the plain Australian share market by nearly 3 percentage points.
Three things changed, all at once
For 15 years VAS + VGS had three big tailwinds. All three have flipped.
What VAS and VGS miss
VAS + VGS is diversified, but diversified doesn't mean complete:
You don't need to own all of these. The point is that with only VAS and VGS, you accept whatever the broad market-cap index gives you, with no way to lean towards what's leading right now.
A better approach: core and satellite
I'm not saying sell everything. The foundation of a good portfolio is still broad, low-cost diversification. But instead of relying on just two ETFs forever, consider a core and satellite approach:
- Core (around 60%): a diversified ETF like DHHF, covering Australian, global, emerging markets and small caps.
- Satellites (around 40%): smaller positions in areas the core misses or barely holds.
Here's how two example satellite mixes would have compared, using past returns:
The inflation-aware mix, with gold, hedged global shares, Australian resources and energy as satellites, would have returned 19.7% over the past year, about 11 points more than VAS + VGS. The theme mix did better over 12 months but trailed VAS + VGS over five years, a reminder that satellites need to match the environment.
Reality check: when VAS + VGS still makes sense
Core and satellite isn't for everyone. It means more decisions, more ETFs and more responsibility: you need a view on which satellites make sense, when to hold them and when to move on. Get it wrong and satellites can hurt returns.
The verdict
VAS + VGS isn't a bad portfolio. It worked brilliantly because it matched the cycle. Every portfolio is a bet on a certain environment, even the simple ones. In practice, that means four things:
- Keep a diversified core: VAS + VGS, DHHF, VDHG or VanEck's Core Plus funds can all still be the foundation.
- Use satellites deliberately: gold, hedged international shares, commodities, energy and resources can cover gaps.
- Understand your currency bet: unhedged global shares help when the Aussie dollar falls and hurt when it rises.
- Review as the cycle changes: the winners of 2010–2024 may not be the winners of the next five years.
The better question isn't "is VAS + VGS a good portfolio?" It's "is my portfolio built for the market I'm actually in?"
Want to compare these ETFs yourself? Use the free ReviewETF compare tool, or read my Vanguard vs Betashares comparison.
Watch the full video on YouTube →
General information only. ETFs and portfolios named are examples, not recommendations, and don’t consider your objectives, financial situation or needs. Returns are to March–April 2026 and will change. Hypothetical portfolios are illustrations, not actual results. Consider the PDS and personal advice before investing.