The 850-nm oxide-confined vertical-cavity surface-emitting lasers with petal-shape holey structures are presented. An area-weighted average refractive index model is given to analyse their effective index profiles, and the graded index distribution in the holey region is demonstrated. The index step between the optical aperture and the holey region is obtained which is related merely to the etching depth. Four types of holey vertical-cavity surface-emitting lasers with different parameters are fabricated as well as the conventional oxide-confined vertical-cavity surface-emitting laser. Compared with the conventional oxide-confined vertical-cavity surface-emitting laser without etched holes, the holey vertical-cavity surface-emitting laser possesses an improved beam quality due to its graded index distribution, but has a lower output power, higher threshold current and lower slope efficiency. With the hole number increased, the holey vertical-cavity surface-emitting laser can realize the single-mode operation throughout the entire current range, and reduces the beam divergence further. The loss mechanism is used to explain the single-mode characteristic, and the reduced beam divergence is attributed to the shallow etching. High coupling efficiency of 86% to a multi-mode fibre is achieved for the single-mode device in the experiment.