New research from the AFR and State Street shows that the ASX ETF market continues to grow at record pace.
According to the report, the Australian market could grow to $380 billion in funds under management in 2026, up from about $320 billion last year and just $71 billion in 2020.
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The rise of thematic investing
A significant shift that is contributing to this trend is the rise of thematic investing.
Traditionally, ASX ETFs were designed to track broad, diversified indexes like the S&P/ASX 200 Index (ASX: XJO) or S&P 500 Index (SP: .INX).
However thematic funds focus on much more specific, niche sectors or "themes".
This focus can bring amplified returns when these sectors outperform the broader market, as investors gain concentrated exposure to high-growth areas.
These can be areas like clean energy, artificial intelligence, or cybersecurity.
However, this same concentration also introduces higher volatility and risk, particularly if the theme falls out of favour or fails to deliver on expected growth.
Exploring which thematic funds have outperformed can give great insight into the broader economic landscape as to which industries and sectors are outperforming.
With that in mind, here are three of the best thematic ASX ETFs over the last three years.
Global X Semiconductor ETF (ASX: SEMI)
This ASX ETF seeks to invest in companies that stand to potentially benefit from the broader adoption of tech-enabled devices that require semiconductors. This includes the development and manufacturing of semiconductors.
It has risen more than 232% in the last three years, driven by the explosion in artificial intelligence.
Semiconductors are a special type of material that can control electricity – sometimes it lets electricity flow, sometimes it blocks it.
Because of this property, semiconductors are the building blocks of modern electronics. They're used to make microchips, which power everything from your phone to cars to medical devices.
BetaShares Global Gold Miners ETF – Currency Hedged (ASX: MNRS)
This ASX ETF aims to track the performance of an index (before fees and expenses) that comprises the largest global gold mining companies (ex-Australia), hedged into Australian dollars.
In the last 3 years, it has risen more than 173%.
It has risen over the past three years mainly because a strong bull run in gold prices boosted the profits of gold mining companies, whose earnings (and share prices) tend to increase faster than the underlying commodity.
VanEck Australian Banks ETF (ASX: MVB)
Put simply, this fund gives investors exposure to a portfolio of seven ASX-listed banks and financial institutions.
This includes the big four banks.
It has risen approximately 48% in the last three years, driven by high interest rates boosting bank profits, and solid dividend payouts attracting investors.
