The inaugural InvestSMART ETF Scorecard report, which looked at fund performance over 12 months to August 2024, found six of the 10 most popular ETFs in Australia were focused on global equities.
Overall, the 10 most popular ETFs gained $16.1 billion in assets under management, accounting for a third (31%) of total inflows.
“ETFs are one of the most popular ways of investing for Australians, with total assets under management reaching $213 billion in August 2024, an increase of approximately $61 billion from August 2023. The gains were driven by solid growth in global stock markets and strong investors. cash inflows,” the report said.
The VanEck MSCI International Quality ETF (ASX: QUAL) has proven to be the most popular global equity ETF, recording net inflows of over $2 billion.
However, it remains the third most popular ETF overall, after 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.
Although Australian ETFs topped the rankings for most popular, international ETFs were the most popular ETF category in the 12 months to August 2024.
One likely reason is that investors see the benefits of investing internationally and want exposure to the booming U.S. technology sector, the report said.
According to the report, the list of top 10 performing ETFs, however, was largely dominated by global equity ETFs.
The Betashares Geared US Equity Fund Currency Hedged (ASX: GGUS) was the best performing ETF with a return of 46.6% over one year, followed by the Betashares Crypto Innovators ETF (ASX: CRYP) with a return of 43. 3%.
At the other end of the scale were the Global BBUS) which returned -37.7 percent. hundred.
Also among the worst performers were commodities ETFs, with the report noting that while gold-themed ETFs performed “exceptionally well”, other themed ETFs such as Global : ETPMPD) recorded a decrease of 25.2%.
“Investing in thematic or active ETFs can be tempting because of 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 ahead, Hodge predicts that over the next decade, ETFs will likely become the cornerstone of wealth-building strategies, especially as “soaring house prices” make ownership more property even further out of reach of younger generations.
“It is crucial for investors to look beyond short-term gains and focus on long-term performance. For example, six of this year’s 10 best-performing ETFs earned three stars or less in our “star rating” system. This year’s winner could easily be next year’s loser.
