The ASX is home to 146 listed Exchange Traded Funds (ETFs) — how do you know which ones are performing well?
You can buy and sell them as if they were companies, but they operate more like private hedge funds.
All the money invested in the portfolio will be allocated across a series of assets, most commonly other listed companies. These companies will be included in a basket set up to track an exchange or index — such as the ASX200.
The share price will inevitably rise and fall with the portfolio’s performance, which has been set up as a proxy for the exchange.
Unlike private hedge funds, they will have relatively smaller portfolios, the average size is only US$184 million ($A262 million).
But this year ETFs have performed very well, having returned an average of 12.1 per cent.
In fact, only 3 out of 145 have suffered losses this year.
A word of warning, we’re going to mention some specific ETFs but it shouldn’t be taken as an investment recommendation. If you’re in the market for a new ETF, please do research beyond this article and do not merely rely on past performance.
The best performing fund is BetaShares’ Geared US Equity Fund (ASX: GGUS) which has returned an impressive 39 per cent this year.
Meanwhile, the iShares Core S&P 500 ETF (ASX:IVV) has only returned 12 percent — perhaps speaking to the level of growth outside the big boys.
IVV invests in almost all of the biggest US firms including the FAANG stocks, Microsoft, Berkshire Hathaway and Exxon Mobil.
The next two best performing ETFs are both operated by VanEck and are focused on China.
Namely, China New Economy (ASX: CNEW) and China AMC CSI 300 (ASX: CETF). The latter invests mainly in CSI 300 stocks, such as Ping An, ZTE and China Vanke.
The former fund invests in a broader range of stocks — although they are heavily focused on pharmaceuticals, food and beverages.
There are various other ETFs with a more specific focus, such as BetaShare’s Global Robotics (ASX: RBTZ) which invests in robotics stocks, mainly in the US and Japan. Among its holdings are Mitsubishi and Keyence Corp.
|Name||Code||Price (26 April 2019)||Assets (US$)||YTD Return|
|BetaShares Geared US Equity Fund||GGUS||$17.68||$26.2m||38.6%|
|Vaneck Vectors China New Economy||CNEW||$6.75||$26.4m||38.0%|
|VanEck Vectors China CSI 300||CETF||$59.13||$92.3m||35.2%|
|BetaShares Global Robotics||RBTZ||$9.75||$14.7m||26.1%|
|ETFS ROBO Global Robotics and Automation ETC||ROBO||$60.83||$101.9m||24.1%|
|ETFS Morningstar Global Technology||TECH||$80.31||$51.6m||21.8%|
|UBS IQ MSCI USA Ethical ETF||UBU||$30.01||$5.4m||19.7%|
|BetaShares Global Cybersecurity||HACK||$7.66||$103.9m||19.0%|
|Montgomery Global Equities Fund||MOGL||$3.80||$71.8m||18.9%|
|BetaShares NASDAQ 100 ETF||NDQ||$19.19||$354.6m||18.8%|
Only three ETFs have declined and all of them are hedge funds which aim to profit from market downturns. They do this by shorting futures of major indices. While they succeeded last year, they have gone in the opposite direction this year.
While bear market hedge funds do protect from downturns, investing in them means you’ll miss out on gains many other investors enjoy during bull markets.
|Return (30 August-21 December 2018)||Return
|BetaShares Australian Equities Bear Hedge Fund||BEAR||$12.80||16%||-12%|
|BetaShares Australian Equities Strong Bear Hedge Fund||BBOZ||$11.64||39%||-26%|
|BetaShares US Equities Strong Bear Hedge Fund||BBUS||$3.89||40%||-31%|
But these selected ETFs aside, 2019 has been a remarkable year for Australian ETFs with so few recording losses and solid performances from the vast majority of securities.
This content does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.
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