There's often a misconception that diversified ASX ETFs come with limited upside.
While it's true your ETF isn't going to double in value in one day like a speculative penny stock, funds can still far outpace indexes like the S&P/ASX 200 Index (ASX: XJO).
To prove this point, here are three fundamental ASX ETFs that have beaten the ASX 200 so far this year. For context, the ASX 200 is up 7.95% YTD.
Image source: Getty Images
iShares S&P/ASX Small Ordinaries ETF (ASX: ISO)
The first ASX ETF with strong returns so far in 2025 is ISO ETF.
The fund aims to provide investors with the performance of the S&P/ASX Small Ordinaries Accumulation Index, before fees and expenses.
The index is designed to measure the performance of small-capitalisation Australian equities included in the S&P/ASX 300 index, but not in the S&P/ASX 100 index.
It is a very balanced ETF, made up of roughly 200 holdings, with none representing more than 1.85%.
It has risen an impressive 15.72% so far in 2025 – almost doubling the returns of the ASX 200.
Vanguard Ethically Conscious Australian Shares Fund (ASX: VETH)
As the name suggests, this fund provides exposure to the FTSE Australia 300 Choice Index.
The index excludes the securities of companies that have a specified level of business involvement in fossil fuels, nuclear power, alcohol, tobacco, cannabis, gambling, adult entertainment or weapons.
The index also excludes companies that the index provider determines are involved in controversial conduct related to principles of the United Nations Global Compact.
The fund has risen 11.43% YTD.
It has a significant exposure (more than 27%) to the big four bank shares. At the time of writing is made up of 234 total holdings.
Vanguard MSCI Australian Small Companies Index ETF (ASX: VSO)
This fund provides exposure to small companies listed on the Australian Securities Exchange.
The sectors in which the ETF invests include industrials, materials and consumer discretionary.
VSO ETF offers potential long-term capital growth, which can be typical of the small company market sector.
So far in 2025, the fund has risen 12.98%, far ahead of the ASX 200 index.
Since its inception in 2011, it has provided more than 10% annualised returns.
It is currently made up of 184 holdings, with no holding representing more than 2.35% of the fund.
