ASX Sector Analysis

Stock Investing in Australia: ETFs or DIY?

You can generate 24% a year by picking just 14 well-chosen ASX stocks. That’s the power of stock picking over index hugging.

If you’re looking at investing options in Australia, one question keeps coming up.
Should you go with ETF funds like Vanguard—or invest in individual stocks?

Why Picking Stocks Beats Vanguard

Stock picking offers the opportunity to perform better than the average; a rational fundamental way of ensuring you are tilting the odds in your favour. While there are individual stock risks, there are also individual stock opportunities. Good stock pickers should over time be able to beat ETFs.  Though it must be said that in tranquil times, ETFs perform better. But these are not tranquil times.

Individual stocks, like individual investors can outperform the market. Join today.

Stocks airlifted into the ASX200

Take the latest additions to the ASX 200: Nick Scali (NCK) and Austal (ASB).

Nick Scali $NCK
We tipped NCK at $1.40 back in 2012—now it trades over $19.

Austal we recommended it at 62 cents in 2013—it’s now above $6.

NCK_20yrs_June 2025

10x Plus Returns

With dividends included, $NCK and $ASB have delivered 10x-plus returns.

These are classic cases of stock investing in Australia paying off when you think ahead.
So ask yourself: do you want to be an index follower, or an index leader?
We have many examples of individual stocks out performing.

But individuals with a portfolio of shares, how do they perform?

Let’s look at the real number

Investing Performance in Australia Stock Picking Wins _2025_June)

Investing Performance: Stock Picking Wins

Investment Average Annual Return (%)
Term Deposit* 3.0%
ETF Vanguard Australian Shares Index* 13.1%
UTRR Small Cap Portfolio** 22.7%
UTRR 300+ Stock Tips*** 76.4%
UTRR Best Buys*** 85.0%

*12 months
** annual return over 2 years
*** average return over 13 years

ETFs

There is a role for ETF funds Vanguard, Beta shares and others in a balanced portfolios as set out in our portfolio builder program. In tranquil times ETFs will perform better and they give you instant diversification, They literally track the benchmark index. Vanguard’s annualised returns for 1year is around 13% and 3 years is 9%.

ETFs offer diversification, but the cost of owning everything is that you don’t truly benefit from anything. ETFs track sentiment—not value.In stable markets, ETFs may hold up. But we’re not in tranquil times. And that’s exactly when smart stock investing in Australia gives you the edge

In stable markets, ETFs may hold up. But we’re not in tranquil times. And that’s exactly when smart stock investing in Australia gives you the edge.

The key?
Buy quality companies at value prices. Be patient. Think long-term.

Short-term thinking leads to average returns. Index followers miss the next wave of growth.
We focus on finding the next Nick Scali, the next Austalbefore they’re in the index.

The Bottom Line

Individual investors have the edge. You’re not locked into the index. You can access tax-effective dividends, cherry-pick future leaders, and ride the upside.

So what should you do next?
It’s simple: Access our best ASX stocks to buy now.
The sooner you start, the greater your long-term gains.

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Richard Hemming

Founder, BA (Econ, maths statistics), FSIA

Richard is an experienced equities analyst, stockbroker, and financial editor, having worked for over 30 years in finance.

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