By the end of September, Australia’s exchange-traded fund (ETF) market surpassed $225 billion, allowing local investors to enjoy the benefits of diversified, passive investing.
Recent data from Global X revealed that the top-performing ETFs year-to-date (YTD) span a diverse range of sectors, with multiple winners emerging.
Namely, for the week ending 1 November, Global X Shares Bitcoin (EBTC) led the charge with a return of 68.6 per cent in 2024.
The list was topped by Munro’s Climate Change Leaders Fund Managed Fund, which returned 58.5 percent, followed by the Global X Physical Silver ETF at 42.3 percent, the Fang+ ETF at 39.4 percent, and the Betashares Geared US Equity Fund - Currency Hedged in fifth place with 38.5 percent.
Other notable performers included the Perth Mint Gold Fund with a return of 38.1 percent, the Montaka Global Extension (Quoted Managed Hedge Fund) at 38 percent, the iShares China Large-Cap ETF at 37.9 percent, the iShares Physical Gold ETF at 37.7 percent, and the Global X Physical Gold ETF rounding out the top ten at 37.5 percent.
Marc Jocum, an investment strategist at Global X, noted that this year's top performers span a wide range of sectors and asset classes, marking a departure from recent trends.
“Unlike 2023 which was dominated by crypto and technology, this year has seen greater breadth in markets, highlighting the importance of diversification to avoid betting on one area,” Jocum told InvestorDaily.
“While some themes have continued their strong run, such as bitcoin represented by the Global X 21Shares Bitcoin ETF (EBTC) and mega-cap tech represented by the Global X FANG+ ETF (FANG), other themes have emerged.”
Namely, commodities have delivered strong returns this year, with precious metals in particular benefitting from favourable market conditions.
“The Federal Reserve’s initial rate cut, along with dovish policies from other global central banks, has signalled the start of a monetary easing cycle, which historically has created a supportive environment for metals like gold and silver,” the investment strategist explained.
The robust performance of silver has been bolstered by rising industrial demand, supported in part by recent stimulus measures from China.
“Gold, meanwhile, keeps hitting record highs as we may be witnessing the early stages of a secular bull market for the precious yellow metal,” Jocum added.
“With ongoing market volatility, falling real yields, an uncertain election outcome, a potential weakening US dollar, rising geopolitical tensions and strong investor demand, conditions may continue to be favourable for gold.”
Moreover, he noted, following years of underwhelming performance, Chinese shares have turned a corner and are now outperforming US shares, marking the first pendulum swing in China’s favour since 2017.
Notably, VanEck’s latest Industry Pulse report for September recently revealed that China’s equity market benchmark surged 21.1 per cent for the month in the space of just a few days, marking its strongest move since 2014.
Jocum added: “While some active ETFs have delivered strong returns in 2024, putting a few of them at the top of performance leaderboards, the category as a whole continues to experience net outflows as investors shift towards index-based strategies.”
As such, he said that it’s worth noting that this year’s active outperformers could easily become next year’s underperformers.
This comes as the latest SPIVA scorecard revealed that over 90 per cent of active global equity fund managers in Australia have trailed an index benchmark over the past 5 and 10 years, and only a small fraction of those that outperform can maintain that success consistently throughout successive periods.
