How Many ETFs Should You Own?
Wondering how many ETFs you should own? Most Australians need just 1 to 3. Here is how to build a simple, genuinely diversified ETF portfolio.
By Timothy Hirou GaschereauPublished 7 min read
Most investors need just 1 to 3 ETFs. Not 10, not a spreadsheet with 15 tickers, not a portfolio that looks like a financial adviser's Christmas tree. More ETFs is almost never better. Beyond 3 or 4 funds, you tend to add complexity, overlap and rebalancing headaches rather than genuine diversification.
New to this? Start with what an ETF is, then come back for the how-many question.
🎯 The essential: Most investors need 1 to 3 ETFs, not 10 or 15. More funds does not automatically mean more diversification, because many popular ETFs hold the same big US companies. A single all-in-one fund like VDHG or DHHF gives instant global diversification; the classic two-fund combo is VAS (Australian shares) plus VGS (global shares). The real test for any new fund: does it give me genuine exposure to something I do not already have?
The short answer
The goal is not to own as many funds as possible. It is to get broad, genuine exposure to the assets that match your situation, and then stay invested. A 2-ETF portfolio with real diversification beats a 10-ETF portfolio full of overlap every time.
Why more ETFs is not more diversification
Here is the trap many new investors fall into: they buy 8 or 10 ETFs thinking they are spreading risk widely, but they are actually doubling and tripling up on the same companies. Many popular ETFs hold the exact same stocks at the top. VGS, NDQ and IVV all hold Apple, Microsoft, Nvidia and Amazon as major positions. Own all three and you are not diversified across three different things; you are heavily concentrated in US mega-cap tech, spread across three fund wrappers. The ideal number is not about the count, it is about whether each fund gives you exposure to something genuinely different.
The 1-ETF portfolio
One ETF is a completely legitimate strategy, and for many investors it is the best one. All-in-one diversified ETFs like VDHG and DHHF hold thousands of companies across Australia, developed markets and emerging markets in a single ticker, and rebalance themselves automatically. VDHG includes a small bond allocation; DHHF is 100% equities. It suits beginners, set-and-forget investors, and honestly anyone who values simplicity. There is no shame in owning one ETF; some very experienced investors do exactly that.
The 2-ETF portfolio
The most popular DIY structure among Australian investors, because it is simple and gives you control over your Australian versus global split. The classic combination is VAS (Australian shares, including franking credits) plus VGS (around 1,500 developed-market companies). Together they cover most of the investable world. A common starting split is 70% VGS and 30% VAS, though some go 60/40 or 50/50. There is no single right answer; the important thing is picking a split you are comfortable with and sticking to it.
The 3-ETF portfolio
A third fund makes sense when you want exposure to something the first two genuinely do not cover. The two common additions are emerging markets (VGS is developed markets only, so an EM fund like VGE adds China, India, Taiwan and others) and bonds (a fund like VAF or VGB adds defensive ballast if you are closer to retirement or want less volatility). A third ETF does add rebalancing complexity, since you now track three weights, but for most people it is still very manageable.
The 4 to 5 ETF portfolio
This can make sense for investors with a deliberate strategy who will do the maintenance. Common additions include sector ETFs (like HACK for cybersecurity), property ETFs (like VAP for Australian REITs), or high-dividend ETFs (like VHY). The key question before adding any fund: does this give me genuine exposure to something I do not already have? If yes, maybe. If "not really, but it feels more diversified", skip it. More funds also means more tax records, more brokerage and more rebalancing, so make sure the complexity earns its keep.
The overlap problem, and how to check it
Overlap is the most common mistake in DIY ETF portfolios, and it is easy to avoid. A simple three-step check:
- Go to the provider's website for each ETF you own (Vanguard, Betashares, iShares).
- Look at the top 10 holdings for each fund.
- Check whether the same companies appear across multiple funds.
If Apple, Microsoft and Nvidia show up in three of your four ETFs, you are not as diversified as you think. One to know: VDHG and DHHF already hold VGS internally, so buying VGS on top of VDHG just adds overlap to a fund that was already diversified for you.
When it actually makes sense to add another ETF
The test: does this fund give me exposure to an asset class or geography I genuinely do not already have? Genuinely additive: emerging markets (if you are developed-markets only), bonds (if you have no defensive assets), or listed property. Not additive: NDQ or IVV on top of VGS (both heavy in US large-cap tech), or a second global ETF covering the same developed markets. If unsure, compare the top 10 holdings against what you own; the answer is usually obvious. For which funds are worth considering, see the best ETFs guide.
Rebalancing: more ETFs means more maintenance
With one all-in-one ETF, rebalancing is automatic. With 2 to 3 ETFs it is straightforward: once or twice a year, direct new contributions toward whichever fund has drifted underweight (usually no selling, so no capital gains tax). With 4 or more, it becomes a real task: tracking multiple weights, calculating buys across funds, and sometimes selling to rebalance (which can trigger CGT). The simplest portfolio that meets your goals is almost always the best one. Complexity does not add returns; discipline and consistency do.
Simple ETF portfolios at a glance
| Number of ETFs | Example | What it covers | Best for |
|---|---|---|---|
| 1 ETF | VDHG or DHHF | Australian, global and emerging shares (plus bonds in VDHG) | Beginners, set-and-forget |
| 2 ETFs | VAS + VGS | Australian shares plus developed-market global shares | Control over the AU/global split |
| 3 ETFs | VAS + VGS + VGE (or a bond ETF) | Above, plus emerging markets or bonds | Broader coverage or defensiveness |
| 4 to 5 ETFs | Core plus a sector, property or dividend ETF | Above, plus a specific theme | Experienced, deliberate strategies |
Aim for 1 to 3 ETFs. One all-in-one fund is genuinely enough for many people; a VAS plus VGS core adds control of your Australian versus global split. Before adding a fourth or fifth fund, check the top holdings for overlap, and only add something that gives you exposure you do not already have. The simplest portfolio that meets your goals usually wins.
❓ Frequently asked questions
How many ETFs should a beginner own?
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One or two is plenty. A single all-in-one fund like VDHG or DHHF gives instant diversification across thousands of companies in one ticker. If you want a bit more control, VAS plus VGS is a simple and effective two-fund portfolio. Starting simple and staying consistent beats a complex portfolio you struggle to maintain.
Can you have too many ETFs?
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Yes. Once you go beyond 3 to 4 ETFs, you often start adding overlap rather than genuine diversification. More funds also means more rebalancing, more tax records and more decisions. The sweet spot for most Australian investors is 1 to 3 ETFs.
Is 1 ETF enough?
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Absolutely. A well-chosen all-in-one ETF like VDHG or DHHF holds thousands of companies across Australia, developed markets and emerging markets, and rebalances itself automatically. For most investors, one good ETF is genuinely enough.
Do overlapping ETFs cancel out diversification?
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They do not cancel it out, but they dilute it. If two of your ETFs both hold Apple, Microsoft and Nvidia as top positions, you are concentrated in those companies more than you probably realise. Overlap means a 5-ETF portfolio can be far less diversified than it looks on paper.
How many ETFs is too many?
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There is no universal rule, but for most retail investors more than 4 or 5 ETFs is probably too many. Beyond that, each new fund tends to add complexity and overlap rather than meaningful new exposure. Ask: does this fund give me something I genuinely do not already have?
Should I own more ETFs as my portfolio grows?
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Not necessarily. A larger portfolio does not automatically need more ETFs. What matters is genuine exposure to the asset classes and geographies that match your goals. Many experienced investors with large portfolios stick to 2 or 3 ETFs.
Keep reading
Sources
This article is general information only, not financial advice. It does not take into account your circumstances. Fund holdings and fees change over time, and examples here are indicative as of mid-2026. Check each fund's product disclosure statement, or a licensed adviser, before investing. Past performance is not a reliable indicator of future performance.
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Explore the calculators →General information only. This article is educational and does not constitute personal financial advice. It does not account for your circumstances. Consider your own situation and seek advice from a licensed adviser before acting. Read our full disclaimer.
Timothy Hirou Gaschereau
Founder of Snowball Invest, not a financial adviser.
I write about what I'm learning myself, because nobody ever taught us how to take control of our own money. It's a skill, not a mystery, and it's never too late to learn it. The best day to start was yesterday, the second best is today.
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