The best and worst-performing ETFs

ETFs have surged in popularity over the past few years, becoming a go-to for many investors. Given their flexibility, low costs, and ability to track broad market indexes many Aussies are tapping into ETFs for their long-term goals whether that's saving for a home deposit, investing for their kids or building wealth for their future. 

With more than 360 ETFs available, however, the hardest part can be narrowing down your options. InvestSMART's ETF Scorecard report is designed to help you with that process.  

We rank the best and worst performers over the 12 months to 31 August 2024 - overall and within six broad categories. But we all know we shouldn't base investment decisions on short-term returns, as one-year returns don't always reflect the quality of an ETF. That's why we have gone one step further and assigned each ETF a star rating out of five which can be a useful filtering tool. 

Here's a look at the best and worst performers.

10 best-performing ETFs

Based on one-year returns to 31 August, 2024. *Currency Hedged (Hedge Fund) ^Managed Fund #Quoted Managed Hedge Fund

Australian investors have enjoyed an excellent 12 months, with both international and Australian equity markets moving higher.

With a return of 46.6%, the Betashares Geared US Equity Fund - Currency Hedged (ASX: GGUS) was the top performer for the 12 months to 31 August 2024. This ETF provides investors with geared exposure to the returns of the broader US share market. It does this by combining investors' funds with borrowed funds to invest in the S&P 500. The total amount borrowed is kept between 50%-65% of the total assets of the fund.

GGUS's outsized gains were a result of a stellar performance by the S&P 500 combined with leverage and a currency hedge. Using leverage is a high-risk strategy that can work well if markets move in your favour but can also involve significant losses if the market moves against you.

In second spot is the Betashares Crypto Innovators ETF (ASX: CRYP) with a return of 43.3%. CRYP invests in a portfolio of listed cryptocurrency companies that have risen significantly due to higher cryptocurrency prices.

Despite its excellent one-year performance, the ETF is still trading at below half of its 2021 listing price, highlighting the speculative nature of this investment.

Not far behind is the Global X Ultra Long Nasdaq 100 Complex ETF (ASX: LNAS) which returned 41.7% and invests primarily in a portfolio of long E-mini Nasdaq-100 Futures contracts.

10 worst-performing ETFs

Based on one-year returns to 31 August, 2024. *Currency Hedged (Hedge Fund) ^Hedge Fund

The past 12 months might have been excellent for many ETFs but others have not fared so well.

The worst performer for the 12 months to 31 August 2024 was the Global X Ultra Short Nasdaq 100 Complex ETF (ASX: SNAS) which returned -40.5%. SNAS is both a short and leveraged product, which means that when the Nasdaq 100 rises (as it has over the past 12 months) the ETF not only sustains losses, but those losses are magnified due to leverage.

The US market has risen in 69 of the past 100 years and fallen in the other 31. Hence, shorting the US market in any given year is simply a bad bet. Given SNAS's poor performance, InvestSMART has given it its lowest star rating of one.

The second worst-performing ETF is the Betashares US Equities Strong Bear Hedge Fund - Currency Hedged (ASX: BBUS) which returned -37.7%. BBUS is another high-risk ETF that is negatively correlated to the returns of the US share market and holds gearing risk.

Third among the worst performers is the Global X Hydrogen ETF (ASX: HGEN) which returned -33.6%. HGEN provides exposure to companies in the global hydrogen industry. However, with the industry still in its early stages, many companies have struggled with the significant costs associated with building out the global hydrogen ecosystem.

One common thread amongst many of the ETFs in this list is that they follow themes, however, themes fall in and out of favour.

This article is part of the InvestSMART ETF Scorecard report 2024. Download the full report to discover: 

• The best and worst performers in the following categories: Australian shares, global shares, fixed income, high yield, commodity and ethical 
• The most and least popular ETFs on the ASX 
• Which ETFs get an InvestSMART five-star rating