3 Australian focused ASX ETFs racing ahead of the ASX 200 this year

These ASX ETFs have flown past the ASX 200.

| More on:

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Key points
  • Three Australian-focused ASX ETFs have significantly outperformed the ASX 200 in 2025, which is up 7.95% year-to-date.
  • The iShares S&P/ASX Small Ordinaries ETF (ASX: ISO) has risen 15.72%, nearly doubling the ASX 200's returns with a diversified portfolio of small-cap Australian equities.
  • The Vanguard Ethically Conscious Australian Shares Fund (ASX: VETH) and the Vanguard MSCI Australian Small Companies Index ETF (ASX: VSO) have risen 11.43% and 12.98% respectively, showcasing strong performance by focusing on ethical investments and small-cap stocks.

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. 

Five people are lunging for the finish line on an athletics track with the picture taken from above as an aerial view of the athletes with their arms outstretched.

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. 

Motley Fool contributor Aaron Bell has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Exchange-Traded Funds (ETFs)

AI microprocessor on motherboard computer circuit.
Exchange-Traded Funds (ETFs)

3 ASX ETFs for easy artificial intelligence (AI) exposure

Want to invest in AI shares? Here are three ways you could do it.

Read more »

Concept image of man holding up a falling arrow with a shield.
Exchange-Traded Funds (ETFs)

This ASX ETF could help protect your portfolio

Many investors are looking for protection right now.

Read more »

Two people work with a digital map of the world, planning their logistics on a global scale.
Exchange-Traded Funds (ETFs)

3 reasons to buy the Vanguard MSCI Index International Shares (VGS) ETF

This is the type of diversified investment I would be comfortable adding to regularly and holding for many years.

Read more »

ETF written in light blue on a chart.
Exchange-Traded Funds (ETFs)

Vanguard ETFs vs. Betashares ETFs: Who's coming out on top?

Combining complementary ETFs may beat chasing a single winner.

Read more »

A glass outdoors with a sign with ETFs written on it, as well as coins and a growing plant.
Exchange-Traded Funds (ETFs)

3 top Vanguard ETFs I'd buy with $3,000

I think all three could work well for long-term investors, depending on the type of exposure their portfolio needs most.

Read more »

Overjoyed man celebrating success with yes gesture after getting some good news on mobile.
Exchange-Traded Funds (ETFs)

Forget Nvidia. This little-known ETF is up more than 3,600% in 2026

Few investors saw this incredible opportunity coming.

Read more »

ETF written in white on a multi coloured background.
Exchange-Traded Funds (ETFs)

5 ASX ETFs to buy and hold forever

Let's see why these funds could be worth considering for the long term.

Read more »

Woman looking at her computer and pondering something.
Exchange-Traded Funds (ETFs)

Should I buy the iShares Global 100 ETF (IOO) now?

I think the quality of the companies inside this global fund gives it a strong foundation for the long term.

Read more »