Young & Invested: The best Aussie ETFs - VAS and A200
Confused on which fund to pick for your portfolio? I look at how the two popular options compare.
Welcome to my column, Young & Invested, where I discuss personal finance and investing for Gen Z and Millennials.
This column aims to be a resource for young investors navigating an ever changing financial, political and social landscape as they try to build wealth. Tune in every Thursday for the latest edition.
Edition 16 (revisited)
With an increasing number of Aussies now holding at least one ETF in their portfolio, it’s a hard proposition to ignore. Offering instant diversification across a basket of securities at a reasonably low cost, their popularity is unsurprising.
In a previous edition of my column, I went through the beginner ETF portfolio and discussed what that may look like in practice. Today i’m exploring Australian equity ETFs and comparing two investor favourites in this category.
ETF investors on the rise despite market volatility
Vanguard recently reported that investors added over $15 billion of inflows into ASX-listed ETFs over the first quarter of 2026.
Vanguard Australian Shares ETF (ASX: VAS) and BetaShares Australia 200 ETF (ASX: A200) have undoubtedly proved crowd favourites. But whilst the two funds may appear indistinguishable on the surface, a closer look highlights some crucial points of deviation.
Vanguard Australian Shares ETF (VAS) vs BetaShares Australia 200 ETF (A200)
Purpose
Both the VAS and A200 ETF track an index meaning they are passively managed.
VAS’s strategy aims to fully replicate the ASX 300, a free-float-adjusted, market-cap-weighted index tracking the 300 largest listed companies in Australia.
On the other hand, A200 ETF tracks the lesser known Solactive Australia 200 Index. Whilst niche, there is little to separate this benchmark from the ASX 200. Investors seeking the familiarity of better-known benchmarks will find negligible differences between the two.
Both ETFs are driven by market-cap weighted methodologies, however VAS has exposure to an additional 100 companies.
Diversification
An area where the two funds marginally differ is is sector exposure and market cap concentration.
VAS tracks the ASX 300 which comprises of 100 more companies than A200’s Solactive Australia 200 Index. The additional companies under VAS result in a slightly lower concentration of mega and large caps and an increased number of smaller cap companies.
The figure below illustrates a market capitalisation breakdown for both ETFs. A200 has a slight skew (45%) to the giant caps in comparison to the giant holdings in VAS (43%) due to the dilution from 100 additional companies under constituency.
Notably, VAS also emphasises a more significant tilt (5.4% vs 3%) towards small and micro-cap companies. Given the negligible weighting given to the bottom 100 companies in VAS, there is isn’t a meaningful difference between the two.
Figure 1: VAS and A200 market capitalisation composition. Source: Morningstar. Author visualisation. Both funds as of 31 May 2026.
The top ten constituents of both ETFs are the same, however as seen in Figure 2, VAS naturally has a lower weighting for its larger constituents due to the inclusion of 100 additional companies.
Comparatively, the top ten holdings of VAS comprise 47% of the portfolio whilst A200 is slightly above at 50%.
Figure 2: Top ten holdings of VAS and A200 by weight. Source: Morningstar. Author visualisation. Data as of 31 May 2026.
Costs
Morningstar research shows that lower-cost funds generally have a greater chance of outperforming their more expensive peers. The chart below shows the cheapest quintile achieving a higher success ratio than the most expensive fee quintile.
Despite this, investors should not look at fees in isolation, as qualitative factors are also vital in determining a fund’s outperformance potential.
Figure 3: Low costs are key to success. Source: Morningstar. Dec 2025.
The total cost of an ETF comprises of holding costs and transaction costs. The latter is often determined by your broker whilst the holding costs are linked to owning shares in an ETF.
Morningstar’s total cost ratio (“TCR”) aims to identify the main component of the total cost of an ETF. The TCR is typically a percentage of the holding value. The TCR includes management or investment fees, performance fees, administration fees and any other fees for underlying funds or similarly outsourced fee arrangements. An investment with a TCR of 0.5% and a holding value of $1,000 would incur $5 in fees per year.
A200 is crowned winner with a TCR of 0.04%, making it the lowest cost ETF providing exposure to the Australian market. VAS isn’t too far off with a TCR of 0.07%. It is important to note that both funds sit in the cheapest quintile of their cateogry where the median fee is 0.93% per year.
Whilst this difference in fees may not appear significant, the TCR becomes a larger consideration (than transaction costs) when the ETF is held over a long-time horizon.
Performance and volatility
From a trailing price returns perspective, the performance of both funds is fairly similar, with A200 generating marginally better returns over the five-year period. Note that 10-year returns were not available for A200 to compare long-term performance differences.
Figure 4: VAS vs A200 trailing price returns. Source: Morningstar. Author visualisation. As of 31 May 2026.
The marginal difference in five-year returns can likely ne attributed to difference in market cap composition between the two funds. A200 has a slightly higher concentration in large-cap companies which have been outperforming in recent years.
Given the presence of smaller caps in VAS, volatility should be considered. Standard deviation is a common measure of volatility that reflects the fluctuation from an average of returns over time. A measure of historical standard deviation (volatility measure) found that VAS derived 12.5% in a 5-year period, compared to A200’s 12.4%. This difference is minor and unlikely to be of concern to most investors.
The inclusion of smaller companies into a fund increases overall volatility, although just slightly in this case. For investors with longer time horizons, this small variation is unlikely to impact returns materially. Investors deciding between VAS and A200 should consider whether they seek a larger presence of micro and small caps for their Aussie equity exposure.
Morningstar Medalist Rating
The Morningstar Medalist Rating is a forward-looking analysis that aims to predict funds’ performance versus a relevant benchmark index or peer group. The three pillars of people, process and parent are used to evaluate ETFs.
Morningstar expresses the Medalist Rating on a five-tier scale running from Gold to Negative. Higher ratings denote our conviction in a fund’s ability to outperform and lower ratings indicating a lack of conviction.
The top three ratings of Gold, Silver, and Bronze all indicate that our analysts expect the investment vehicle to add value or “positive alpha” over the long term when compared with a relevant category index after accounting for fees and risk. Positive alpha simply means to outperform other ETFs in the category.
Both VAS and A200 score Bronze by the Medalist rating meaning Morningstar has conviction that the share class will be able to deliver positive alpha vs other ETFs in the category.
To provide a passive ETF with a Bronze Medalist rating indicates that our analysts do not think that most active funds will outperform their passive counterparts.
How rate ETFs
The Morningstar Medalist Rating is a forward‑looking assessment of how likely a fund is to outperform on a peer-relative basis. Morningstar expresses the Medalist Rating on a five-tier scale running from Gold, Silver, Bronze, Neutral, or Negative ratings. Higher ratings denote our conviction in a fund’s ability to outperform and lower ratings indicating a lack of conviction.
Gold, Silver and Bronze mean that our analysts expect the fund to outperform over the long term, compared to their category peers. Neutral means we think the odds are roughly balanced and Negative means we believe the fund has meaningful obstacles to delivering competitive long‑term returns
Both VAS and A200 score a Bronze Medalist rating, meaning we have conviction that the share class will be able to deliver positive alpha vs other ETFs in the category.
To provide a passive ETF with a Bronze Medalist rating indicates that our analysts do not think that most active funds will outperform their passive counterparts.
Which ETF is best for your portfolio?
When making asset allocation decisions, it is important to align your choices with your investment strategy and goals.
In this case, both ETFs offer similar returns and broad Australian market exposure with minor portfolio and fee differences. The small, yet notable 0.03% variation in TCR for the two funds may be important to select investors. Though in relative terms, VAS and A200 are some of the lowest cost ETFs available in the market.
For investors seeking a broader level of diversification, the presence of the additional 100 companies across the small and micro cap space in VAS may prove attractive.
For more information on ETF investing, you can find some of our best ETF resources here.
