One ETF or a DIY mix?

An all-in-one fund

Some ETFs do the mixing for you by holding Australian shares, overseas shares and sometimes bonds in one fund. Others leave you to choose the mix yourself. An all-in-one fund can be easier to manage, but you still need to understand what it holds and what it costs.

A DIY mix

Other people research separate ETFs for Australian shares, developed overseas markets, emerging markets or bonds. This gives more control over allocations, but also means more decisions, transactions and opportunities to accidentally overlap holdings.

What actually matters

Both approaches can end up with similar underlying investments. Count the total exposure, not just the number of fund tickers. Simplicity, rebalancing effort, transaction costs and your ability to explain what you own are all relevant.

The practical trade-off

An all-in-one fund may hold Australian shares, overseas shares and bonds in a pre-set mix. The manager handles the internal allocation and may rebalance it. That can be simpler, although you're accepting the fund's chosen strategy and ongoing fee. A DIY mix gives you more control but asks you to choose weights, monitor overlap and decide if or when to rebalance.

Buying three ETFs isn't automatically better diversified than buying one. Some funds already contain the others' largest holdings. Compare what the funds actually own rather than how many tickers appear in your account.

How to compare two approaches fairly

1. Write down your desired exposure in plain language, such as a mix of Australian and global shares, with or without bonds.
2. Find the all-in-one fund's allocation and compare it with what your DIY mix would hold.
3. Add up ongoing fees and any brokerage, remembering that DIY trades can create extra costs.
4. Consider how much work you're realistically willing to do each year and what happens if you change your mind.

Neither approach removes market risk. The better question is which structure you understand and can maintain, not which one sounds more sophisticated.