Highest return ETFs in Australia

Exchange traded funds (ETFs) are popular among many Aussie investors. So what are some of the best ETFs on our database and how high are their average returns?

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Exchange traded funds (ETFs) are popular among many Aussie investors. So what are some of the best ETFs on our database and how high are their average returns?

What are Exchange Traded Funds (ETFs)?

ETFs are passively managed investment funds that can be bought and sold on an exchange, such as the Australian Securities Exchange (ASX). Instead of buying shares in one company, investing in an ETF allows you to get a basket of shares or assets from different companies with a single trade.

Many ETFs aim to replicate the performance of an index, such as the S&P/ASX 200 in Australia or the S&P 500 in the United States, or specific assets such as currency or a commodity (like gold, iron ore or agricultural products).

What are the different types of ETFs?

ETFs cover a wide range of asset classes and individual assets. This includes Australian shares, international shares, commodities and currencies. Canstar’s database classifies ETFs into the following types:

Australian Broad Based ETFs

Australian Sector ETFs

Australian Strategy Based ETFs

International Broad Based ETFs

The tables below display the 1-year, 3-year and 5-year returns for different types of ETFs, based on the ETFs on Canstar’s database. The tables are sorted in descending order by 3-year total return, followed by 1-year return.

Remember that past performance is no indicator of future performance.

Before you make any decision to invest in an ETF you might want to consider its Product Disclosure Statement (PDS) and Target Market Determination (TMD), as well as any other relevant documentation.

Highest three-year returns – Australian Broad Based ETFs

Australian Broad Based ETFs track a broad index such as the S&P/ASX 200 or the S&P/ASX 50.

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Australian Broad Based ETFs	1 Year Return	3 Year Average Annual Return	5 Year Average Annual Return
iShares Edge MSCI Australia Multifactor ETF	16.55%	13.60%	11.56%
Vanguard Ethically Conscious Australian Shares ETF	14.17%	12.98%	N/A
Vanguard MSCI Australian Large Companies Index ETF	9.85%	12.75%	13.21%
iShares Core S&P/ASX 200 ETF	11.77%	12.26%	12.17%
SPDR S&P/ASX 200 Fund	11.82%	12.25%	12.21%

Source: www.canstar.com. Returns sourced from publicly available data from the providers and are effective to July 2025. Past performance is not a reliable indicator of future performance. Table sorted in descending order by 3 Year Average Annual Return, followed by 1 Year Return.

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Highest three-year returns – Australian Sector ETFs

Australian Sector ETFs invest in specific sectors of the Australian market, such as banks, financials, resources or property.

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Australian Sector ETFs	1 Year Return	3 Year Average Annual Return	5 Year Average Annual Return
Betashares Australian Investment Grade Corporate Bond ETF	8.14%	6.35%	1.53%
VanEck Australian Corporate Bond Plus ETF	7.20%	5.47%	1.66%
Betashares Australian Bank Senior Floating Rate Bond ETF	5.34%	5.35%	3.16%
Vanguard Australian Corporate Fixed Interest Index ETF	6.24%	4.88%	1.70%
VanEck Australian Floating Rate ETF	5.02%	4.84%	2.95%

Highest three-year returns – Australian Strategy Based ETFs

The investments in Australian Strategy ETFs are selected according to certain investment strategies, such as high-dividend yield or maximised capital growth. They tend to only include a limited number of different Australian stocks, rather than a broad index.

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Australian Strategy Based ETFs	1 Year Return	3 Year Average Annual Return	5 Year Average Annual Return
Betashares Geared Australian Equity Fund (hedge fund)	18.19%	20.18%	21.99%
Betashares Australian Quality ETF	18.76%	18.79%	N/A
VanEck MSCI Australian Sustainable Equity ETF	14.38%	13.25%	11.18%
Vanguard Australian Shares High Yield ETF	11.95%	13.12%	14.45%
iShares Core MSCI Australia ESG ETF	13.47%	13.05%	N/A

Highest three-year returns – International Broad Based ETFs

International Broad Based or Broad Market ETFs work in a very similar way to Australian Broad Based ETFs, except they track broad international share markets, such as the S&P 500.

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International Broad Based ETFs	1 Year Return	3 Year Average Annual Return	5 Year Average Annual Return
Betashares NASDAQ 100 ETF	21.81%	25.06%	19.08%
iShares Global 100 ETF	18.73%	21.91%	19.19%
SPDR S&P 500 ETF Trust	17.84%	20.14%	18.26%
iShares S&P 500 ETF	17.73%	19.94%	18.08%
iShares Core MSCI World Ex Australia ESG ETF	15.30%	19.65%	17.68%

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How to invest in Australia using ETFs

You can invest in Australian or international shares by purchasing ETFs like those listed above. This can be done in the same way you would ordinarily buy shares—which is through a broker. There are two different types of brokers:

Online brokers

Online brokers (also known as online share trading platforms) are generally the most popular form of brokers, as they tend to be more accessible for new investors and charge lower brokerage fees compared to full service brokers. They typically don’t offer recommendations or advice in regards to your financial decisions. If you’re interested in an online share trading platform, Canstar’s Share Trading Platform Awards might be a good place to start, as the awards recognise the providers that deliver outstanding value to customers based on both price and features.

Full service brokers

Full service brokers can offer tailored advice on buying and selling shares, as well as provide research and compile investment plans for customers. They generally charge a higher brokerage fee as a result of providing this professional financial advice.

The kind of broker that’s right for you will depend on your needs, budget and financial goals.

Pros and cons of ETFs

Pros

Diversification: ETFs can expose you to a diversified portfolio of assets in a single trade. You may also be able to invest in a wider range of markets or assets.

Transparency: The issuer provides daily information relating to the ETF, including the net asset value (NAV).

Low cost: ETFs are usually cheaper than actively managed funds.

Ease of trading: ETFs can be traded on the ASX or another online trading platform during trading hours.

Cons

Market risk: There is always the risk that the market an ETF is tracking could fall in value, which will generally lead to the ETF falling in value.

Currency risk: If the ETF invests in international assets, it will be exposed to currency movements.

Liquidity risk: Some ETFs invest in non-liquid assets (e.g. emerging market debt), so the ETF provider may find it hard to create or redeem securities.

Tracking errors: Where the return of the ETF may differ from the index or asset it’s designed to track.

What’s the difference between an ETF and a managed fund?

Most ETFs are passively managed, which means the role of the fund manager is simply to make sure the ETF tracks the value of a specified index or asset. This is in contrast to actively managed funds, where the fund manager aims to outperform a specified benchmark. As a consequence, ETFs generally have lower management fees than actively managed funds. Managed funds tend to also buy and sell securities more frequently, which may incur more brokerage costs.

Generally speaking, managed funds also have minimum investment requirements, whereas ETFs do not—although the broker you choose to buy an ETF through may have one. ETFs can be bought and sold through an online share trading platform or a broker. Managed funds, on the other hand, are not always listed on trading platforms and may require engaging a full service broker in order to invest in them. That being said, managed funds generally allow you to invest additional funds in them without paying a brokerage fee, unlike an ETF which would have an associated fee for each investment transaction.

Things to look out for when investing in ETFs

There’s a couple of things to consider when investing in ETFs, such as:

The different associated management fees.

The brokerage costs involved when trading.

Checking what index or asset the fund is tracking, including the companies in which it’s investing.

The historical returns—like the ones in the table above. While these returns are not an indicator of future performance, they can be useful when looking at how an ETF has performed over a period of time.

You can also compare other investment products and platforms with Canstar, such as online share trading platforms, international share trading platforms, term deposits and superannuation funds.

ETF FAQs

ETFs can provide you with access to a range of different asset classes that some investors may not ordinarily be able to access (e.g. fixed income securities, currency markets and international equities). As a result of this, ETFs can provide a level of diversification to your portfolio that may be difficult to achieve through singular company investing alone.

ETFs also generally have lower fees and no minimum investment requirements, which make them more cost-effective and accessible to the everyday investor. They’re also typically passively managed, which means they rely less on the skill and experience of a fund manager and more so on the investment approach of the ETF itself.

Exchange Quoted Managed Funds (EQMFs), also referred to as active ETFs, are ETFs that have a fund manager who is actively making decisions about what to invest in. This active strategy differs from the passive investment strategies of a regular ETF, as EQMF managers typically aim to beat a set benchmark or index rather than track it. As a result of this, EQMFs will typically have higher fees than ETFs. EQMFs are traded in the same way as ETFs, meaning they can be purchased as units via a broker.

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This article was reviewed by our Content Editor Alasdair Duncan before it was updated, as part of our fact-checking process.

Nick Whiting

Content Producer

Nick is a Content Producer at Canstar, providing assistance to Canstar's Editorial Finance Team in its mission to empower consumers to take control of their finances. He has written hundreds of articles for Canstar across all key finance topics. Coming from a screenwriting background, Nick completed a Bachelor of Film, Television and New Media Production from Queensland University of Technology. Nick has also completed RG 146 (Tier 1), making him compliant to provide general advice for general insurance products like car, home, travel and health insurance, as well as giving him knowledge of investment options such as shares, derivatives, futures, managed investments, currencies and commodities.
Nick’s role at Canstar allows him to combine his love of the written word with his interest in finance, having learned the art of share trading from his late grandfather. Nick strives to deliver clear and straightforward content that helps the everyday consumer navigating the world of finance. Nick is also working on a TV series in his spare time. You can connect with Nick on LinkedIn .