We present a full vector, finite element analysis of oxide apertured VCSELs, focusing on the optical properties required for low threshold design. We examine several versions of an 870 nm oxide DBR, oxide aperture VCSEL design to gain insight into the physical processes determining diffractive loss. Our results suggest the diffraction may be modeled as a coupling loss to the parasitic mode continuum. In this approach, the loss is determined from two competing factors: (1) the lasing mode penetration into the radial cladding region, and (2) the relative alignment of the eignenmode and parasitic mode wavevectors. We also find the characteristic blueshift resulting from the transverse optical confinement.