Australia’s best and worst-performing ETFs revealed

Following a turbulent year for markets it has emerged that those who embraced new technologies were the big winners, while those who bet against the market lost, new research has revealed.

The latest Stockspot ETF Report has revealed how investment themes and broad-based ETFs have performed in the last year.

The report showed that over the last 12 months, the ETF market in Australia grew 79 per cent, from $56.9 billion to $102.1 billion.

This was the fastest year-on-year increase since 2010.

However, not all ETFs grew at the same rate, with the bounceback being unevenly distributed following downturns in March 2021.

“Over the last year, broad indexed ETFs have continued to outperform most active fund managers and listed investment companies (LICs) in Australia. Even during the COVID-19-induced market volatility, ETFs enjoyed inflows and superior performance compared to the majority of actively managed funds,” report lead and Stockspot founder Chris Brycki said.

Best performers

Unsurprisingly, technology-based stocks, or in this case a bundle of technology stocks, were the big winners.

Although in FY2020-21, both broad-based technology and niche technological themes did well.

The ETFs Battery Tech & Lithium ETF (ASX: ACDC) took out top spot this year with a 96 per cent return over the last 12 months.

“ACDC has benefited from the large demand in battery technology and lithium mining, which contribute to renewable energy and electric vehicle initiatives,” Mr Brycki explained.

Broad-based ETFs in both Australia and the US also saw strong performance over the year.

The BetaShares S&P/ASX Australian Technology ETF (ASX: ATEC) and ETFS FANG+ ETF (ASX: FANG) were up 81.6 per cent and 73 per cent, respectively.

The report also found that some active fund managers, which largely underperformed the market in 2020, were able to show strong signs of growth during the recovery.

“The K2 Australian Small Cap Fund (Hedge Fund) (ASX: KSM) was the second best performer this year (up 95 per cent), but still significantly underperformed over the long term, compared to a broad-based index,” Mr Brycki said.

Worst-performing ETFs

The worst-performing ETFs for 2021 were specialised products, rather than broad-based, as the sharemarket recovered from COVID-19-induced lows.

The report showed that the BetaShares Australian Equities Bear (Hedge Fund) (ASX: BEAR) was the worst-performing ETF over the last year, down over 30 per cent.

“It demonstrates how ETFs that are designed to do the opposite of the market can be risky trading tools,” Mr Brycki said.

Since the lows in March 2020, the Australia dollar also rose against global currencies, with ETFs betting on the US or the euro delivering negative returns for investors.

Hedges against market downturns such as gold were also in the worst-performing funds over the last 12 months.

“After a strong previous couple of years, physical gold ETFs were in the bottom five this year. Both the ETFs Physical Gold (ASX: GOLD) and Perth Mint Gold (ASX: PMGOLD) were down over 15 per cent, Mr Brycki concluded.

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Article by Cameron Micallef on June 02, 2021 – nestegg.com.au

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