ASX ETFs can be savvy investment vehicles to gain exposure to a sector or index.
I often advocate for these to make up some portion of an investor's portfolio because they can take some of the guesswork out of long-term decisions.
For example, investors may learn that in Australia, many of the largest, market-dominant stocks are banks.
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How dominant are bank stocks?
At the time of writing, 5 of the top 10 companies by market capitalisation are part of the bank/financial sectors.
This might prompt investors to compare the big four banks, or other finance stocks and try to decide which one to add to their portfolio.
The challenge, of course, is predicting which will rise the furthest in the long term.
The benefit of ASX ETFs is that you can actually get exposure to all of them in one trade.
Here are two examples that track this sector that have brought big returns over the past year.
BetaShares S&P/ASX 200 Financials Sector ETF (ASX: QFN)
As the name suggests, this fund tracks the performance of an index (before fees and expenses) comprising the largest ASX-listed companies in the financial sector, including the 'Big 4' banks and insurance companies, but excluding real estate investment trusts (REITs).
Its largest exposure (31.3% weighting) is to Commonwealth Bank of Australia (ASX: CBA).
At the time of writing, there are 28 companies in the portfolio.
Over the last year, it has risen an impressive 18.66% and ended FY25 as one of the top 6 best performing ASX ETFs with Australian companies.
This means a hypothetical investment of $10,000 a year ago is now worth $11,866 (before fees).
That is more than $1,800 of profit in just 12 months.
VanEck Vectors Australian Banks ETF (ASX: MVB)
This fund is even more concentrated than the previous fund.
It contains 7 ASX-listed banks and financial institutions.
According to Vaneck, the fund always has a minimum of 6 holdings, with a goal of a maximum weighting of 21% for any one company. It also comes with an average dividend yield of 4.05%.
Based on this ethos, it has a close to even split between the big 4 banks and Macquarie Group Ltd (ASX: MQG), which all have weightings between 16-21%.
Additionally, it has a small exposure (between 1.2% and1.6%) to Bendigo and Adelaide Bank Ltd (ASX: BEN) and Bank of Queensland Ltd (ASX: BOQ).
The fund has risen an impressive 15.45% over the last 12 months.
This means a hypothetical investment of $10,000 a year ago is now worth $11,545 (before fees).
