10 Best Performing ETFs to Buy for Australian Investors

Exchange Traded Funds (ETFs) have become increasingly popular among Australian investors for their ability to offer diverse investment opportunities with a single trade. As we look ahead to 2024, the ASX presents a range of ETFs that cater to various investment preferences, including our focus on the best ETFs in Australia. These funds not only cover traditional assets but also extend to cutting-edge themes like technology and climate change.e trade.

The top 10 ETFs for Australian investors are a reflection of current market leaders, showcasing their ability to thrive amidst economic fluctuations. These funds are selected to represent a broad spectrum of the market, providing a glimpse into the potential opportunities for investors.

This article will guide you through the details of each of the 10 top-performing ETFs in Australia, exploring their performance and the sectors they cover. It serves as a valuable resource for both experienced investors and those new to ETFs, offering insights to help you make informed investment choices.

What are ETFs?

Exchange Traded Funds, or ETFs, are investment funds that are traded on stock exchanges, much like regular stocks. They are designed to track the performance of a range of assets, which can include stocks, bonds, commodities, or even a specific market index. ETFs combine the benefits of traditional mutual funds with the trading flexibility of individual stocks, providing investors with a diverse and cost-effective way to invest in the market.

One of the key advantages of ETFs is their diversification. By investing in an ETF, an investor can gain exposure to a broad market segment or a specific theme without having to buy individual securities. This can help to spread risk and reduce the impact of a poor-performing stock on the overall portfolio.

Another benefit is the liquidity that ETFs offer. Since they are traded on exchanges, they can be bought and sold throughout the trading day at market prices, allowing investors to enter or exit positions quickly and easily. This is in contrast to mutual funds, which are priced at the end of the trading day and can only be bought or sold once.

ETFs also tend to have lower fees compared to traditional mutual funds. These funds are passively managed, which means their goal is to track the performance of a chosen benchmark rather than actively trying to exceed it. The cost savings can be significant over time, contributing to the overall return on investment.

In summary, ETFs are a versatile investment tool that allows for broad market exposure, flexible trading, and cost efficiency. They are an excellent option for investors looking to diversify their portfolios while keeping costs and management fees low.

What are the different types of ETFs?

ETFs come in various types, each designed to cater to different investment strategies and goals. Here's a look at some of the different types of ETFs available:

1. Stock ETFs: These are the most common type of ETF and invest in a broad range of stocks, such as the S&P 500 or a specific sector like technology or healthcare.

2. Bond ETFs: These focus on bonds and are used by investors seeking fixed income. They can be based on government bonds, corporate bonds, or a mix of both.

3. Commodity ETFs: These ETFs track the price of commodities like gold, oil, or agricultural products. They allow investors to gain exposure to the commodity markets without having to buy the physical assets.

4. Currency ETFs: Also known as currency hedged ETFs, these allow investors to take positions in foreign currencies, providing a way to hedge against currency fluctuations.

5. Real Estate ETFs: These invest in real estate assets, either directly or through real estate investment trusts (REITs). They offer a way to invest in the property market without the need to buy physical properties.

6. Thematic and Sector ETFs: These are focused on specific themes or sectors, such as clean energy, artificial intelligence, or biotechnology. They allow investors to capitalize on trends within particular industries.

7. Geographic ETFs: These are designed to invest in companies from specific regions or countries. They can provide exposure to emerging markets or developed economies.

8. Volatility ETFs: These are designed to profit from market volatility. They can use various strategies, such as selling options or investing in inverse ETFs.

9. Leveraged and Inverse ETFs: These types of ETFs utilize financial derivatives to amplify returns or to speculate in opposition to the market trends. They are more intricate and come with a higher level of risk, making them suitable for investors with a more advanced understanding of the market.

10. ESG (Environmental, Social, Governance) ETFs: These focus on companies that meet certain ESG criteria, reflecting a growing interest in sustainable and responsible investing.

Each type of ETF offers unique opportunities and risks, and understanding these can help investors tailor their portfolios to their individual preferences and risk tolerance.

10 best-performing ETFs in Australia

The Australian market has seen a surge in the popularity of ETFs, offering investors a wide array of choices to align with their investment strategies. Here, we list the top 10 best ETFs in Australia for the year to date, along with a brief introduction for each ETF:

Data Source: (Moomoo, November 27, 2024)

These ETFs have demonstrated exceptional performance and offer a mix of traditional and innovative investment opportunities. They are worth considering for investors looking to diversify their portfolios with high-performing assets.

Global X 21Shares Bitcoin ETF (EBTC)

The Global X 21Shares Bitcoin ETF (EBTC) is a 100% physically backed Bitcoin ETF designed to provide Australian investors with a higher quality Bitcoin investment solution than what is currently available in the market. The ETF holds Bitcoin in its custodial accounts with private keys stored in offline wallets, also known as "cold storage," to enhance security. Investors can invest in EBTC directly through their existing brokerage accounts without the need to manage, secure, and safeguard Bitcoin themselves.

Munro Climate Change Leaders Active ETF (MCCL)

The Munro Climate Change Leaders Active ETF (MCCL) invests in 15 to 25 publicly traded companies across various industries and countries whose revenue prospects are expected to improve as investment and attention towards decarbonisation increase. The ETF aims to identify undervalued and mispriced sustainable growth trends in the market and seek out the winning stocks that arise from these trends.

DigitalX Bitcoin ETF (BTXX)

The DigitalX Bitcoin ETF (BTXX) aims to track the performance of the Bitcoin price (before fees and expenses). The fund's investment strategy is to hold almost all of its assets as long-term holdings of Bitcoin to achieve its investment objective. BTXX is a passively held Bitcoin ETF that does not trade Bitcoin unless it is to facilitate the creation and redemption of Bitcoin interests. At least 80% of the fund's digital currency will be stored in cold storage to minimize the risk of private key loss, destruction, or theft.

VanEck Video Gaming & eSports ETF (ESPO)

The VanEck Video Gaming & eSports ETF (ESPO) is designed to capture the growth of the video gaming and eSports industry, which has become a significant part of the entertainment sector, especially among younger demographics. The ETF offers a tool for investing in this rapidly growing industry, which has experienced explosive growth due to advancements in technology and an expanding global audience.

BetaShares Geared US Eq Ccy Hdg ETF (GGUS)

The BetaShares Geared US Eq Ccy Hdg ETF (GGUS) uses leverage to amplify the returns of the US equity market, targeting investors seeking higher growth potential with a higher risk profile. The ETF provides an opportunity to amplify investment returns in the US stock market through the use of leverage.

Montaka Global Extension ETF (MKAX)

The Montaka Global Extension ETF (MKAX) offers a global investment strategy that extends beyond traditional markets, seeking out companies with high growth potential across the globe. The ETF aims to provide investors with global growth opportunities by investing beyond traditional markets.

BetaShares Crypto Innovators ETF (CRYP)

The BetaShares Crypto Innovators ETF (CRYP) invests in companies involved in the cryptocurrency ecosystem, including those that provide the technology and services driving the digital asset revolution. The ETF offers investors an opportunity to invest in the technology and service providers of the cryptocurrency and digital asset space.

Global X 21Shares Ethereum ETF (EETH)

The Global X 21Shares Ethereum ETF (EETH) tracks the performance of the cryptocurrency Ether, which operates on the Ethereum blockchain (before fees and expenses). It provides holders with a way to trade Ether in a highly regulated environment without the need for their own Ethereum wallet. EETH offers exposure to Ethereum, known for its smart contract capabilities and decentralized applications (dApps).

Global X FANG+ ETF (FANG)

The Global X FANG+ ETF (FANG) tracks a basket of high-growth technology companies, including the FANG stocks (Facebook, Amazon, Netflix, Google), which have been major drivers of innovation and growth in the tech sector. The ETF offers investors an opportunity to invest in these high-growth technology companies.

BetaShares Video Games and Esports ETF (GAME)

The BetaShares Video Games and Esports ETF (GAME) is dedicated to the video gaming and eSports sector, an industry that has seen explosive growth driven by advancements in technology and a growing global audience. The ETF offers investors a tool for investing in this rapidly growing industry.

How to invest in ETFs in Australia

Investing in ETFs in Australia is a straightforward process, and using a platform like moomoo can make it even more accessible. Here's a step-by-step guide on how to invest in ETFs using Moomoo:

1. Account opening: Begin by opening an account with moomoo. This process typically involves providing your personal details, proof of identity, and tax file number (TFN) if you are an Australian resident.

2. Funding your account: Once your account is approved, you'll need to fund it. Moomoo allows you to transfer money from your bank account directly into your Moomoo account.

3. Research: Before investing, use moomoo's research tools to analyse different ETFs. Look at historical performance, fees, and the underlying assets of the ETFs you're interested in.

4. Selecting an ETF: Choose the ETF that aligns with your investment goals. Moomoo provides a list of ETFs available on the ASX, along with detailed information about each one.

5. Placing an Order: To buy an ETF, you'll place an order through the moomoo platform. You can choose between a market order, which is executed at the current market price, or a limit order, where you specify the maximum price you're willing to pay.

By following these steps, you can effectively invest in ETFs through Moomoo, leveraging the platform's tools and resources to make informed decisions and manage your portfolio.

How to find the best performing ETFs?

Finding the best performing ETFs in Australia involves a combination of research, analysis, and an understanding of your own investment goals. Here's a guide to help you identify top-performing ETFs:

1. Define your investment objectives: Start by determining your financial goals, risk tolerance, and investment horizon. This will help you narrow down the type of ETFs that align with your strategy.

2. Research ETFs: Use financial news, reports, and research platforms to learn about various ETFs. Look for those that focus on sectors or themes that interest you or that have strong growth potential.

3. Analyse historical performance: While past performance is not indicative of future results, it can provide insights into an ETF's volatility and trends. Look at historical returns over different time frames.

4. Examine the underlying holdings: Review the ETF's holdings to understand what assets it invests in. This will give you an idea of the ETF's exposure to different markets and sectors.

5. Evaluate fees and expenses: Lower fees can lead to higher returns over time. Compare the expense ratios of different ETFs to find those that are cost-effective.

6. Consider liquidity: ETFs that have higher trading volumes are more liquid, which means they can be purchased or sold more readily. This is a crucial factor to evaluate when you are looking to enter or exit (buy or sell) your investment position.

7. Assess the ETF provider: The reputation and experience of the ETF provider can impact the quality of the ETF. Well-established providers often have better resources for managing their funds.

8. Use screening tools: moomoo online etf trading platform offer screening tools that allow you to filter ETFs based on criteria such as performance, fees, and asset class.

9. Consult a financial advisor: If you're unsure, it's always a good idea to consult with a financial advisor who can provide personalised advice based on your financial situation.

By following these steps, you can increase your chances of finding the best-performing ETFs in Australia that have the potential to perform well and meet your investment needs.

Pros and cons of investing in ETFs in Australia

Putting money into Exchange Traded Funds (ETFs) in Australia can be a savvy investment choice for some, yet, as with all investment options, it has its unique set of pros and cons. Here's a detailed analysis:

Pros of investing in ETFs in Australia

Cost-effectiveness

ETFs typically have lower management fees and operating costs compared to actively managed funds. For instance, an ETF might invest in up to fifty different listed stocks, but you only pay one brokerage fee. Additionally, ETFs often have lower management fees than actively managed funds. Low costs are crucial for long-term investment returns as the difference in fees can accumulate to a significant amount over time.

Diversification

ETFs offer an easy way to achieve portfolio diversification. For example, an ETF tracking the S&P/ASX 200 index can spread an investor's funds across the 200 companies that make up the index. Moreover, the variety of ETFs allows for investment in different types of assets, such as international stocks, bonds, and commodities.

Convenience and transparency

ETFs are listed on stock exchanges, allowing investors to buy and sell them like stocks, which means they can trade at any time the exchange is open. Additionally, ETFs typically disclose their Net Asset Value (NAV) daily, giving investors clear insight into their investments.

Low minimum investment

Compared to many traditional managed funds, ETFs usually do not have high minimum investment requirements, allowing investors to start with smaller amounts.

Cons of investing in ETFs in Australia

Volatility

Despite the diversification offered by ETFs, this does not make investments immune to market volatility, and losses can still be suffered in a bear market. This risk can increase with the specialisation of the ETF—a fund focusing on a small niche market is likely to be more volatile than a larger, broader one.

Liquidity risk

Some ETFs may invest in illiquid assets, such as emerging market debt, making it difficult at times for the ETF provider to create or redeem securities.

Tracking error

An ETF's return may differ from the index or asset it is designed to track due to differences in the assets owned by the ETF and the index it is designed to track, fees, taxes, and other factors.

Leveraged ETF return skew

Leveraged ETFs use financial derivatives and debt to amplify the returns of an underlying index. Investments in leveraged ETFs, which can amplify gains by two or three times, also carry the risk of amplifying losses by the same multiples. As a result, it's crucial to thoroughly assess these high-risk, speculative investments before committing capital.

Start investing in Australian best performing ETFs

As we wrap up our exploration of the best performing ETFs in the Australian market, it's important to reflect on the key takeaways and considerations for investors. Here are some final thoughts:

1. Performance is not everything: While the top-performing ETFs are attractive, it's crucial to consider other factors such as the fund's objectives, your investment goals, and your risk tolerance.

2. Diversification is key: The best ETFs often come from different sectors and asset classes. A well-diversified portfolio can help manage risk and potentially enhance returns.

3. Cost matters: Lower fees can significantly impact your long-term returns. Always compare the expense ratios of ETFs before making a decision.

4. Rebalance regularly: Periodically review your portfolio to ensure it aligns with your investment strategy and risk profile. Rebalance as needed to maintain your desired asset allocation.

5. Consider the long term: Investing in ETFs should be part of a long-term strategy. Short-term market fluctuations are normal, and a long-term perspective can help you navigate these.

6. Use tools and resources: Leverage the tools and resources available to you, such as financial advisors, research platforms, and educational materials, to make informed decisions.

7. Risk management: Understand the risks associated with ETFs, including market risk, liquidity risk, and tracking error, and manage them accordingly.

By keeping these final thoughts in mind, you can approach ETF investing with a balanced and informed perspective, ready to make decisions that are right for you.

FAQs about the best performing ETFs in Australia

Is a good time to invest in ASX ETFs?

Investing in ASX ETFs can be a prudent decision at any time, but whether it's a "good" time depends on several factors:

1. Market and economic conditions: The Australian and American stock markets are currently reaching new record highs, with the ASX 200 index (ASX: JXO) surpassing the 8,400-point mark for the first time and the American S&P 500 index (SP: .INX) breaking above 6,000 points in November, marking historic milestones that signal a positive outlook for investors. This upward trend, along with the exceptional performance of top ETFs like the Global X 21Shares Bitcoin ETF (EBTC) and the BetaShares Crypto Innovators ETF (CRYP), suggests a robust market environment and potential for continued growth.

2. Personal finances and investment goals: Determine the timing of investment based on personal financial health and long-term goals, with caution for those needing funds in the short term.

3. Risk tolerance and diversification: Decide on investment based on personal comfort with market volatility and the desire to diversify the investment portfolio.

4. Historical performance: Consider historical ETF performance in various market conditions, though past performance is not a guarantee of future results. The performance of ETFs like the VanEck Video Gaming & eSports ETF (ESPO) and the Global X FANG+ ETF (FANG) can provide insights into potential future trends.

5. Market sentiment and ETF specifics: Be aware of how market sentiment can influence behavior, and research the dynamics of specific ETFs to make informed decisions.

In summary, while there's no one-size-fits-all answer to whether it's a good time to invest in Australian ETFs, the current market conditions, combined with your individual circumstances, market research, and long-term investment strategy, can guide your decision-making process.