Young & Invested: The ETFs backed by Australia’s wealthiest investors
New data reveals the ETFs gaining traction in SMSF portfolios.
Mentioned: Vanguard All-World ex-US Shares ETF (VEU), Vanguard Australian Shares ETF (VAS), Vanguard MSCI Intl ETF (VGS), Vaneck Msci International Quality Etf (QUAL), iShares S&P 500 ETF (IVV)
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 80
Investors often fall into the habit of assuming that wealth and investing skill are perfectly correlated. Someone with a seven-figure portfolio must know something the rest of us don’t. But reality is rarely that simple. The existence of a large portfolio doesn’t automatically make someone an oracle.
Even so, it can be useful to examine how people behave when they’re managing significant sums of money for the long-term. SMSFs now represent around 25% of total superannuation assets, with the average fund balance hovering just under $2 million. Collectively they manage $1 trillion in assets and unlike members of large super funds, SMSF trustees tend to make their own investment decisions.
The latest data from the Class Annual Benchmark Report for 2026 reveals the changes to SMSF portfolios over the 12 months to June 30, 2026. Among ETFs, there was relatively little movement among the largest holdings. Familiar names such as VAS, IVV, QUAL and VGS continued to dominate.
Notably, a change in the rankings saw Vanguard’s All-World ex-US Shares ETF VEU move up into fifth place among the most widely held ETFs by SMSFs that invest in ETFs. The rise comes alongside continued popularity of US-focused ETFs, suggesting some investors may be broadening rather than replacing their international exposures.
Whilst that doesn’t necessarily tell us where the country’s wealthiest investors think markets are headed next, it may reveal something about how they’re constructing portfolios in the current environment.
In this article I’ll take a closer look at VEU and examine why it’s finding its way into more SMSF portfolios.
Vanguard All-World ex-US Shares Index ETF VEU
- Total Cost Ratio: 0.04%
- Assets under management: 6.2 billion (AUD)
- Morningstar Medalist Rating: Bronze
- Benchmark: MSCI World Ex Australia
- Morningstar Category: Australia Fund Equity World Other
Vanguard’s All-World ex-US Shares ETF VEU provides exposure to over 3,700 large and mid-sized companies across both developed and emerging markets with the notable omission of the United States. This may seem like a strange proposition in a market where US exceptionalism has dominated global equity returns, but it is likely this exclusion which appeals to many investors.
The fund tracks the FTSE All-World ex-US Index, which is market capitalisation weighted meaning the largest and most valuable firms command the greatest share of the portfolio. Companies that grow and increase in value naturally occupy a larger share of the index, while businesses that struggle become less influential over time.
Composition
The underlying index begins by screening and ranking companies listed outside the US according to their free-float adjusted market cap. Then it targets firms representing roughly the top 86% of the investable market, with additional buffers designed to minimise unnecessary trading and turnover. The resulting portfolio contains almost 4,000 constituents.
Given the market cap weighting and the sheer volume of constituents, VEU’s annual turnover has typically been ~5% of the portfolio, which is a fraction of its peer average figure. Lower turnover translates into lower transaction costs (which detract from returns) and improved tax efficiency for investors.
The size of the portfolio also means that individual stock risk is relatively limited. Most holdings account for less than 2% of the portfolio with Taiwan Semiconductor Manufacturing being the only exception at around 4.4%.
From a geographic perspective, VEU offers exposure to parts of the world that often receive less attention from investors constructing global portfolios. Japan represents the largest country weighting at 15.6%, followed by Taiwan at 8.6% and China at 7.8%. Australia accounts for around 4.2% of the portfolio. On a sector level, financials claim the highest allocation (24%) followed by technology (20%).
The composition makes VEU look noticeably different from many of its peers. As of September 2026, US shares represented roughly 44% of the average fund in this category and ~74% of the category index.
The portfolio can offer diversification benefits for Australian investors, however most domestic investors are already underweight international equities (relative to global market cap), so removing the world’s largest sharemarket entirely may not be an obvious diversification win on its own.
But VEU can also complement portfolios already heavily exposed to the US through popular funds such as IVV or VGS. In that sense, it can provide access to regions that are secondary considerations in portfolios dominated by US tech stocks. In that context, VEU’s growing popularity among SMSFs is particularly interesting. It doesn’t necessarily represent a vote against the region but likely reflects an effort to balance its dominance.
Performance and costs
From a performance perspective, the fund’s competition has been both a blessing and a curse. Over the decade to October 2026, VEU underperformed the MSCI World ex Australia Index by approximately 3.5% annualised. Our analyst notes that the primary reason for this was the absence of US exposure over the period where its market delivered extraordinary returns. Being absent from the party came with a significant opportunity cost over this period.
However, this is less a flaw than a feature of the strategy. VEU is not designed to capture US outperformance and there are periods when that trade-off benefits. A good example of this is early 2025 when market volatility from US tariff policies caused the fund to experience a lower drawdown in comparison to the category index. This means VEU could provide relative resilience if and when US equities fall out of favour.
The fund’s biggest advantage seems to be its cost. VEU’s total cost ratio is 0.04% p.a., which places it among the cheapest funds in its category, where the median fee is around 0.68%. Though costs are not a factor to be considered in isolation, investors effectively gain access to thousands of companies across dozens of markets for a fraction of what is typically charged.
A note on listing
VEU is a cross-listed fund meaning it trades on multiple markets simultaneously, though it is domiciled in the United States. This may require added tax consequences and administrative burden. For further information, you can read tax implications when investing in overseas shares and ETFs.
Concluding thoughts
The purpose of this article wasn’t to speculate on the demise of US equities or suggest others should blindly replicate the portfolios of the wealthiest Aussies. Every investor is ultimately working towards different goals and navigating specific individual circumstances and constraints.
I don’t believe VEU’s continued growth in SMSF portfolios signals that wealthier investors are abandoning America. The past decade of equity returns has made global investing increasingly synonymous with the US. VEU broadens the opportunity set to the remaining emerging and developed markets. Perhaps it’s less a prediction and more an acknowledgement that the sources of future returns are less clear.
