The inaugural InvestSMART ETF Scorecard report, which examined fund performance over the 12 months to August 2024, revealed that six of the 10 most popular ETFs in Australia were focused on global shares.
Overall, the 10 most popular ETFs gained $16.1 billion in assets under management, accounting for a third (31 per cent) of total inflows.
“ETFs are one of the most popular ways for Australians to invest, with total assets under management hitting $213 billion in August 2024 – an increase of about $61 billion from August 2023. The gains are due to solid growth on global share markets and strong investor cash inflows,” the report said.
The VanEck MSCI International Quality ETF (ASX: QUAL) proved to be the most popular global shares ETF, notching net inflows of over $2 billion.
However, it remained the third most popular ETF overall, following the Vanguard Australian Shares Index ETF (ASX: VAS) with net inflows of over $2.5 billion and the Betashares Australia 200 ETF (ASX: A200) with net inflows of $2.44 billion. Both ETFs invest in the Australian market.
Despite Australian ETFs topping the table as the most popular, international ETFs was the most popular ETF category over the 12 months to August 2024.
One likely reason is that investors see the benefits of investing internationally and want exposure to the booming US tech sector, the report said.
According to the report, the list of top 10 best performing ETFs, however, was largely dominated by global shares ETFs.
The Betashares Geared US Equity Fund Currency Hedged (ASX: GGUS) was the best performing ETF with a 46.6 per cent return over one year, followed by Betashares Crypto Innovators ETF (ASX: CRYP) with a return of 43.3 per cent.
On the other end of the scale was the Global X Ultra Short Nasdaq 100 Complex ETF (ASX: SNAS) which returned -40.5 per cent and the Betashares US Equities Strong Bear Hedge Fund – Currency Hedged (ASX: BBUS) which returned -37.7 per cent.
Also among the worst performers were commodity ETFs, with the report noting that while gold-themed ETFs performed “exceptionally well”, other themed ETFs such as Global X Physical Palladium (ASX: ETPMPD), recorded a 25.2 per cent fall.
“Investing in themed or active ETFs can be tempting for the outsized returns they can promise, but they tend to be more volatile than passive ETFs. Investors should limit exposure to these riskier options to a small percentage within their portfolios,” said Ron Hodge, CEO of InvestSMART Group.
Looking forward, Hodge forecast that in the next decade, ETFs will likely become a cornerstone of wealth-building strategies, especially as “skyrocketing property prices” push home ownership further out of reach for younger generations.
“It’s crucial for investors to look beyond short-term gains and focus on long-term performance. For instance, six of this year’s top 10 best-performing ETFs have scored three stars or below in our ‘star rating’ system. This year’s winner could easily be next year’s loser.”
