I am always trying to cover ASX ETF news and shed light on funds bringing great returns.
Every year, new funds are hitting the ASX, giving investors more options to add thematic exposure to their portfolios.
I also believe in some circles, there is a misconception that ASX ETFs can't bring significant returns compared to individual stocks.
While ASX ETFs aren't likely to double overnight, gaining timely exposure to certain sectors can provide big upside.
One such fund that has performed exceptionally well recently is the BetaShares Global Banks ETF – Currency Hedged (ASX: BNKS).
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An ASX ETF with niche exposure
Some ASX ETFs track indexes like the S&P/ASX 200 Index (ASX: XJO) or the S&P 500 Index (SP: .INX).
However this fund offers specific exposure to the largest global banks (ex-Australia).
At the time of writing, it is made up of 60 underlying holdings. This includes banks such as JP Morgan Chase, Bank of America and Wells Fargo.
Its largest exposure by geography is:
- United States (28.3%)
- Canada (14.6%)
- Britain (9.5%)
Proven success
Since April 9th, it is up 50%.
This has far outpaced the ASX 200 Index (up 20%) and the S&P 500 Index (up 23%) over the same timespan.
Zooming out even further, it has a per annum return of 22.82% over the past 5 years.
This means an initial investment of $10,000 five years ago would today be worth $22,321.
Not bad for a set and forget ASX ETF.
Can it continue?
While past performance never guarantees future performance, the fund is outperforming for a few reasons.
This fund is benefiting from a powerful combination of cyclical recovery, policy tailwinds, and renewed investor confidence in global banking profitability.
Global deal-making and IPO activity has surged recently, with interest rate spreads remaining wide.
Furthermore, US regulatory easing is freeing up capital for dividends and growth.
For investors looking for exposure here in Australia, another bank focussed ASX ETF that has surged recently is VanEck Vectors Australian Banks ETF (ASX: MVB).
It is up 31% since April and has nearly doubled in the last 5 years.
A combination of these two would provide investors with exposure to leading banks both in Australia and globally.
