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The formation of mixed-species social groups, whereby heterospecifics form and maintain either transient or stable groups with each other, can confer substantial fitness benefits to individuals. Such benefits may arise via multiple mechanisms associated with both predation avoidance and foraging efficiency. In fishes, mixed-species shoaling reportedly occurs where displaced tropical species (known as "vagrants") interact with resident temperate species, although little is known about the nature and frequency of such interactions. To investigate this phenomenon, we used displaced tropical Indo-pacific Sergeant Abudefduf vaigiensis settling in temperate south-eastern Australia as a model system. Underwater visual surveys revealed shoal composition and size differed significantly between open-water and reef habitats, with shoals in open habitats being larger and more speciose. Shoals containing A. vaigiensis were mainly mixed-species, and larger and more speciose in open habitats than nearer to reef. Since both foraging efficiency (via access to plankton) and predation threat likely increase with increasing distance from reef habitat, we suggest that mixed-species shoaling mitigates predation risk whilst allowing increased foraging opportunities for A. vaigiensis in open areas. These findings provide support for the importance of mixed-species shoaling to the persistence of tropical reef fishes in temperate regions., (© 2020 The Fisheries Society of the British Isles.)