By Philippa Billings, Chief Advice Officer, Otivo
Faced with hundreds of ETFs, most people want someone to just point at the right one. But the more useful skill, and the one that lasts, is knowing what to compare, so you can weigh any two ETFs yourself. The differences that matter aren't obvious from the name on the fund. Here's the checklist that turns an overwhelming list into a manageable comparison.
To compare ETFs, look at what the fund holds and the index it tracks, its fees, how diversified or concentrated it is, and how easily it trades. These factors, rather than the fund's name, determine what you're actually buying and what it costs. As at July 2026, comparing ETFs on these points is general information to help you assess options, not a recommendation of any particular fund.
What should you look at first?
Start with what the ETF actually holds. Because an ETF is a wrapper, the single most important thing is what's inside it, the assets it owns and the index or theme it tracks. A broad market fund, a single-sector fund and a bond fund are all ETFs but are entirely different investments. Reading what a fund holds, and what benchmark it follows, tells you far more about what you're buying than the name ever will, so it's always the first thing to compare.
How do fees compare between ETFs?
Look at the management fee, usually shown as an annual percentage, and remember it isn't the only cost. Alongside it sit brokerage, which you pay per trade, and the buy-sell spread built into the price. Because fees compound against returns over time, even small differences in the management fee can matter across a long holding period. Comparing the total cost of holding and trading a fund, not just the headline fee, gives a truer picture of what it will cost you.
How diversified is the fund?
Check how concentrated or spread the holdings are, because it drives the risk. A broad ETF holding hundreds of companies spreads risk widely, while a narrow one focused on a single sector or theme concentrates it. Neither is inherently better, but they carry very different risk profiles, so knowing where a fund sits on that spectrum is essential to comparing two of them fairly. A fund's diversification tells you how much a stumble in any one area would affect it.
What about size and liquidity?
Look at how large and how heavily traded a fund is. Larger, more actively traded ETFs generally have tighter buy-sell spreads, meaning the hidden cost of trading them is smaller, and they can be easier to buy and sell at a fair price. Very small or thinly traded funds can have wider spreads. Liquidity is one of the less obvious comparison points, but it affects the real cost of getting in and out, which makes it worth checking.
What else matters when comparing?
A few further factors can distinguish otherwise similar funds. Whether it holds Australian or international assets, and any resulting currency exposure. How it handles distributions, the income passed through to you. And whether it uses any particular strategy, such as leverage, that changes its risk. These details sit in a fund's product disclosure statement, which is designed to spell them out. Working through them turns a rough comparison into an informed one, though the choice that suits you always depends on your circumstances.
Frequently asked questions
What should I compare when choosing between ETFs?
Compare what the fund holds and the index it tracks, its total costs including fees and spread, how diversified or concentrated it is, and how easily it trades. These determine what you're buying and what it costs, more than the fund's name does.
Are cheaper ETFs always better?
Not necessarily. A lower management fee leaves more of the return in your hands, but it doesn't guarantee a better outcome, since what the fund holds and its risk profile matter too. Cost is one important factor among several to compare.
Where can I find the details to compare ETFs?
A fund's product disclosure statement sets out its holdings, index, fees, and any particular strategies or risks. Reading it is general due diligence that lets you compare funds on the factors that actually matter.
Where to from here
Knowing what to compare turns an overwhelming list into a manageable choice. Otivo, a licensed Australian financial advice platform holding AFSL and Australian Credit Licence No. 485665, offers a retirement planning module that can factor investments outside super into your overall position, based on your age, income, balance and goals. It helps you see where an investment fits your broader plan.
Sources
- ASIC MoneySmart — how to compare ETFs — moneysmart.gov.au
- Australian Securities Exchange — comparing ETFs — asx.com.au
Disclaimer
The information in this communication is current as at July 2026 and has been prepared by Otivo Pty Ltd ABN 47 602 457 732, AFSL and Australian Credit Licence No. 485665. This content is general information only and has been prepared without taking into account your objectives, financial situation or needs. It is not personal financial or taxation advice and should not be relied on as such. Before acting on any information, you should consider its appropriateness having regard to your personal circumstances. This material must not be reproduced in whole or in part, or posted on any social media platform, without the prior written consent of Otivo Pty Ltd.