Which ETFs have the highest returns?

Exchange traded funds (ETFs) are popular among many Aussie investors, so which on our database have generated the highest returns?

The popularity of ETFs in Australia has soared over the last decade. According to investment adviser Vanguard, the Australian ETF industry is sitting at over $71 billion in assets under management as at October 2020. Between July and September 2020, the industry recorded $4.9 billion in new inflows.

If you’re thinking of investing in ETFs, this article will explain some of the main types of ETFs available in Australia and round up the ETFs in our database that have delivered the highest returns over the past year.

What are ETFs?

ETFs are managed funds that can be bought and sold on an exchange, such as the ASX. Instead of buying shares in one company, ETFs allow you to get a basket of shares or assets with a single trade.

ETFs aim to replicate the performance of an index (like 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). Most ETFs are passively managed, meaning the role of the fund manager is simply to ensure that the ETF tracks the specified index or asset. This is in contrast to actively managed funds, where the manager aims to outperform a specified benchmark. As a consequence, ETFs generally have lower management fees than actively managed funds.

ETFs can be an option worth considering for investors who are interested in shares or similar assets, but are looking for a relatively low-cost product that could provide slightly lower and steadier returns than some other products. ETFs can be bought and sold through an online share trading platform or a broker.

The table below displays some of the International Broad Based ETFs available on our database with the highest three-year returns (sorted highest to lowest by three-year returns and then alphabetically by provider name). Use Canstar’s ETF comparison selector to view a wider range of products. Canstar may earn a fee for referrals.

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 classifies ETFs into the following types:

  • Australian Broad Based ETFs
  • Australian Sector ETFs
  • Australian Strategy Based ETFs
  • International Broad Based ETFs
  • International Sector ETFs
  • Commodity ETFs
  • Currency ETFs

The tables below display one-year returns for different types of ETFs in Canstar’s database. As well as one-year returns, the tables also display returns data for the past:

  • One month
  • Three years
  • Five years

Each table of products shown is sorted by one-year returns, meaning products that have delivered the highest returns over that time will feature more prominently. Bear in mind that past performance is not a reliable indicator of future performance. When comparing ETFs, it can also be helpful to consider factors such as fees, tracking error (where an ETF deviates from the value of the index or asset it is tracking) and the price of the ETF compared to the net asset value (NAV). According to the ASX, the price of an ETF should be at or very close to its NAV. The NAV is calculated by looking at the total value of ETF assets less liabilities, divided by the number of units.

To compare the performance of more ETFs over your preferred length of time, visit Canstar’s ETF comparison page.

Highest one-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.

The table below displays the Australian Broad Based ETFs on Canstar’s database with the highest one-year returns (sorted from highest-lowest and then alphabetically by provider name). Performance data is updated monthly. Before committing to a particular ETF, check upfront with your provider or financial adviser and read the PDS to confirm whether it suits your needs. 

Highest one-year returns – Australian Sector ETFs

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

The table below displays the Australian Sector ETFs on Canstar’s database with the highest one-year returns (sorted highest-lowest and then alphabetically by provider name). Performance data is updated monthly. Before committing to a particular ETF, check upfront with your provider or financial adviser and read the PDS to confirm whether it suits your needs.

Highest one-year returns – Australian Strategy Based ETFs

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

The table below displays the Australian Strategy Based ETFs on Canstar’s database with the highest one-year returns (sorted highest-lowest and then alphabetically by provider name). Performance data is updated monthly. Before committing to a particular ETF, check upfront with your provider or financial adviser and read the PDS to confirm whether it suits your needs.

Highest one-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.

The table below displays the International Broad Based ETFs on Canstar’s database with the highest one-year returns (sorted highest-lowest and then alphabetically by provider name). Performance data is updated monthly. Before committing to a particular ETF, check upfront with your provider or financial adviser and read the PDS to confirm whether it suits your needs.

Highest one-year returns – International Sector ETFs

International Sector ETFs track sectors and industries in the overseas market, such as Technology and Healthcare. International Sector ETFs can offer affordable access to global markets.

The table below displays the International Sector ETFs on Canstar’s database with the highest one-year returns (sorted highest-lowest and then alphabetically by provider name). Performance data is updated monthly. Before committing to a particular ETF, check upfront with your provider or financial adviser and read the PDS to confirm whether it suits your needs.

Highest one-year returns – Commodities ETFs

Commodities ETFs track the performance of physical commodities, like gold, silver and platinum. It’s important to note that when an investor buys a Commodities ETF, they don’t own a physical asset.

The table below displays the Commodities ETFs on Canstar’s database with the highest one-year returns (sorted highest-lowest and then alphabetically by provider name). Performance data is updated monthly. Before committing to a particular ETF, check upfront with your provider or financial adviser and read the PDS to confirm whether it suits your needs.

Highest one-year returns – Currency ETFs

Currency ETFs track currencies such as the Australian Dollar, US Dollar, British Pound and Euro. Currency ETFs may be worth considering for those investors who want exposure to currency movements without actually buying physical tender.

The table below displays the Currency ETFs with the highest one-year returns (sorted highest-lowest and then alphabetically by provider name). Performance data is updated monthly. Before committing to a particular ETF, check upfront with your provider or financial adviser and read the PDS to confirm whether it suits your needs.


Pros and cons of ETFs

If you are considering investing in ETFs, it’s a good idea to weigh up some of the potential advantages and risks.

Pros

  • Low cost: ETFs are usually cheaper than actively managed funds.
  • 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 of the ETF provides daily information relating to the ETF, including the NAV of the ETF.
  • Ease of trading: ETFs can be traded on the ASX during trading hours.

Cons

  • Market risk: There is the risk that the market the 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: The ETF may deviate from the NAV or the asset it is designed to track. According to Moneysmart, this may be because of reasons like illiquidity of the underlying assets or fees.

Want to trade ETFs? The table below displays a snapshot of online share trading platforms on Canstar’s database for ‘casual investors’, and with links to providers’ websites. Please note that these results are based on an average of 2 trades per month and are ordered by Star Rating, then alphabetically by providers’ name. Before committing to an online share trading platform, check upfront with your provider and read the PDS to confirm whether it meets your needs. 

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

This article was originally written by William Jolly. It was reviewed by our Sub Editor Jacqueline Belesky before it was updated as part of our fact-checking process.


About Tamika Seeto:

Tamika SeetoTamika Seeto is a Finance Journalist at Canstar. She joined the team after completing a Bachelor of Journalism and Bachelor of Laws (Honours) at QUT, and has past experience writing for a variety of publications across news, music and the arts. At Canstar, Tamika’s writing tackles everything from superannuation and insurance to the latest budgeting apps worth downloading. Tamika understands the world of finance can seem daunting at times, so she strives to break it down in a way that is easy to understand and relatable. You can follow Tamika on LinkedIn, and Canstar on Facebook.

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