10 ASX ETFs for investors to watch

Background to ETFs

Exchange Traded Funds (ETFs) are an increasingly popular way for investors to gain exposure to a wide variety of investments at a relatively low cost.

ETFs generally hold a particular type of shares, bonds, commodities, currencies, cryptocurrencies or futures contracts and usually reflect the price movement of their holdings. This enables investors to get exposure to particular industries (such as a financial services ETF), an index (such as the ASX200 ETF), international markets (such as a Korean shares ETF), bonds (through a bond ETF), etc.

There are approximately 258 ETFs trading on the ASX through financial services providers such as BetaShares, BlackRock, ETFS Management (AUS) Limited, State Street Global Advisors, Australia Services Limited, VanEck Investments Limited and Vanguard Investments Australia Ltd.

Given their sector specificity, ETFs provide stock investors with a convenient means to wager on the outcomes of broader macro-economic or geo-political developments, as opposed to honing down on particular stocks.

What are the best ETF funds to watch?

2024 could provide investors with a diverse range of macro-economic plays, as geopolitical turmoil in the Middle East and Eastern Europe create both uncertainty and opportunities for markets. Analysts are anticipating an end to hawkish monetary policies in many economies, following long-standing runs of rate hikes that have helped to at least quell inflation.

The following ten ETFs could be very interesting options for investors as of the month of May 2024.

1. Vanguard MSCI Index International Shares ETF (ASX: VGS)

2. Vanguard Australian Shares High Yield ETF (ASX: VHY)

3. Global X ETFs Physical Gold (ASX: GOLD)

4. BetaShares Crude Oil Index ETF - Currency Hedged (ASX: OOO)

5. Vanguard FTSE Asia ex Japan Shares Index ETF (ASX: VAE)

6. Betashares Global Uranium ETF (ASX: URNM)

7. BetaShares Australian Equities Strong Bear Hedge Fund (ASX: BBOZ)

8. Global X ROBO Global Robotics & Automation ETF (ASX: ROBO)

9. Global X Battery Tech & Lithium ETF (ASX: ACDC)

10. SPDR S&P World ex-Australia Carbon Control Fund (ASX: WXOZ)

Vanguard MSCI Index International Shares ETF (ASX: VGS)

Vanguard MSCI Index International Shares ETF is a popular ETF that provides investors with highly diversified exposure to more than 1,000 of the world's biggest listed concerns, including Amazon, Apple and Visa.

The fund is a solid pick for those investors who want to bet on the broader prospects of leading companies in OECD countries, particularly as the central banks and monetary authorities of advanced economies gradually make an exit from a hawkish cycle of rate adjustments in 2024.

Vanguard Australian Shares High Yield ETF (ASX: VHY)

The goal of the Vanguard Australian Shares High Yield ETF is to acquire stakes in ASX-listed companies with higher projected dividends, to produce stronger yields for investors.

While investments that offer strong returns invariably come with higher levels of risk, the Vanguard Australian Shares High Yield ETF seeks to mitigate this risk via heightened diversification.

It currently holds around 70 shares in its portfolio, restricting investment in any single company to 10% and investment in any particular sector to 40%.

These shares thus cover a gamut of sectors, including giants such as BHP Group Ltd, Commonwealth Bank of Australia and Wesfarmers Ltd.

Global X ETFs Physical Gold (ASX: GOLD)

GLOBAL X PHYSICAL GOLD ties itself to the performance of gold via investment in physical bullion which investors can acquire directly by redeeming their units in the fund.

Founded in 2003, is the first physical gold ETF to launch in Australia. Gold could emerge as a safeharbour pick for investors left jittery by conflicts raging in both Eastern Europe and the Middle East. It's also a perennial favourite for those investors seeking to hedge against inflation.

As of May 2024, the fund had delivered a 17.59% total return over the past year, as well as total returns of more than 13% per annum over the past three anf five year periods.

BetaShares Crude Oil Index ETF – Currency Hedged (OOO)

The BetaShares Crude Oil Index ETF - Currency Hedged Synthetic tracks the rise and fall in the price of crude oil against the US dollar and is hedged against currency movements, so that any changes in the value of the Australian dollar will have a limited impact on the price.

Oil prices could be on track to rise, as the global geopolitical atmosphere becomes more uncertain and renewed conflict in the Middle East compounds the impacts of the war in Ukraine. Conflict in the Middle East cause oil prices to rise, especially if simmering tensions between Israel and Iran worsen.

Vanguard FTSE Asia ex Japan Shares Index ETF (ASX: VAE)

The Vanguard ETF Series - Vanguard FTSE Asia Ex Japan Index ETF aims to track the return of the FTSE Asia Pacific ex Japan, Australia and New Zealand Index before fees and expenses.

VAE could see a strong performance in the near-future should the Chinese economy manage to weather ongoing geopolitical tensions with the US and the woes of its largest real estate developers. Despite the impacts of troubles in the country's property sector, analysts both within and outside of China have forecast that the country's GDP growth will exceed 5% in 2024.

Betashares Global Uranium ETF (ASX: URNM)

The Betashares Global Uranium ETF provides investors with a portfolio of some of the world's leading uranium companies, including Boss Energy Ltd (ASX: BOE) and Paladin Energy Ltd (ASX: PDN).

The fund could be a sound bet for investors, if the push for low-carbon power spurs the development of more nuclear energy facilities in major economies.

At the first Nuclear Energy Summit held in Brussels in March 2024, 32 countries adopted a declaration to 'fully unlock' the power of nuclear energy. These countries included Argentina, Bangladesh, Belgium, Canada, China, France, India, Japan, Pakistan, Saudri Arabia, Turkey, the UK and the US.

Emerging economies in particular are increasingly looking to nuclear power as a means for them to cut emissions in an economically viable way, with Thailand and the Philipppines outlining plans to launch nuclear reactors in the near future.

BetaShares Australian Equities Strong Bear Hedge Fund (BBOZ)

The BetaShares Australian Equities Strong Bear Hedge Fund aims to provide geared negative exposure to the Australian sharemarket at a rate of between 2% and 2.75% for each 1% change in the value of the share market.

Over time sharemarkets generally appreciate, so BBOZ doesn't make sense as a long-term investment. However, as a trading tool, BBOZ can be useful for locking in short-term gains or protecting against short-term losses.

This is particularly useful during periods of uncertainty, such as major flare-ups of regional tensions in key parts of the globe.

Global X ROBO Global Robotics & Automation ETF (ASX: ROBO)

The Robe Australia Limited holds shares in companies that potentially stand to benefit from increased adoption and utilisation of robotics and artificial intelligence.

ROBO could be a solid pick for those investors seeking to capitalise on the transformative potential of the latest technological innovations involving the use of generative artificial intelligence (AI), particularly as they apply to the production of real world goods and products.

Global X Battery Tech & Lithium ETF (ASX: ACDC)

The ETFS Battery Tech & Lithium ETF invests in companies throughout the lithium cycle from mining and refining to battery production.This gives exposure to the industry rather than just to mining, which removes some of the volatility caused by lithium prices.

The fund could see a strong performance on the back of the rapidly increasing uptake of electric vehicles in countries around the world, due to concerns over the impacts of climate change.

The International Energy Agency (IEA) estimates that EV sales hit 14 million by the end of 2023, for a 35% year-on-year increase. J.D Power forecasts that US electric vehicle market share will enter double-digit territory in 2024, rising to 12.4% from 7.6% in 2023.

SPDR S&P World ex-Australia Carbon Control Fund (WXOZ)

The SPDR S&P World ex Australia Fund seeks to closely track the S&P Developed Ex-Australia Large Mid-cap Carbon Control Index, by holding shares in companies that have the lowest carbon emissions per unit of revenue.

Its portfolio consits primarily of US-based companies, with top holdings including Apple, Microsoft, Amazon and Alphabet (Google).

WXOZ makes the list because it has diversified holdings of the largest companies least affected by high energy prices, putting it in good stead to weather any ongoing geopolitical disruptions in central Europe and the Middle East.

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