It has weathered the pandemic, inflation and the fastest interest-rate tightening cycle in decades without falling into recession.

However VanEck believes this resilience should not be mistaken for strength. 

While inflation has eased from its peak, underlying price pressures remain among the highest in the developed world, business hiring intentions are softening and consumer confidence remains subdued. Together, they point to an economy that is slowing rather than stalling.

This combination of factors reinforces that investors' portfolios should not be overexposed to the big banks and miners that dominate the ASX 200. 

VanEck contends that there are several reasons investors should look beyond simply tracking the S&P/ASX 200 Index (ASX: XJO). 

Trailing global equities

VanEck argues that simply buying the index is not always the most effective way to build wealth. 

The past financial year has brought this case to the fore more than ever.

Since the start of 2010, the S&P/ASX 200 has trailed the MSCI World, which tracks developed markets globally, in 11 of the past 17 financial years.

But the bigger concern is that the underperformance is getting worse. FY26 saw the underperformance run extend to four consecutive years, and the second biggest performance gap since 1996.

If Australia's economy is entering a period of more subdued growth, investors should not be surprised if earnings growth becomes harder to find domestically. That strengthens the case for looking beyond a standard S&P/ASX 200 index fund.

The case for mid-caps 

According to the report, one option for investors looking to avoid overconcentration is to target mid-caps. 

One way to do this is through the VanEck S&P/ASX MidCap ETF (ASX: MVE). 

The fund focuses on Australia's mid-cap companies, a part of the market that has historically offered an attractive balance between earnings growth and business maturity.

VanEck believes this could be a "sweet spot" of the market. 

They are typically more established than emerging small companies but still have meaningful scope to grow earnings. Analysts expect company profits in this part of the market to grow much faster than Australia's largest companies, while valuations are still around their long-term averages.

MVE provides exposure to this often-overlooked part of the market through the S&P/ASX MidCap 50 Index. For investors looking to complement a large-cap Australian allocation, it offers access to businesses with greater growth potential, without moving too far down the risk spectrum.

The post The growing case for ASX mid-caps: Expert appeared first on The Motley Fool Australia.

Cameron McCormack, Senior Portfolio Manager at VanEck, said large caps like BHP Group (ASX: BHP) and Commonwealth Bank Of Australia (ASX: CBA) dominate headlines and exert the greatest influence on the returns of the whole Australian share market. 

Small caps, meanwhile, often attract attention for their higher-risk, higher-reward potential. Many of these companies are in their growth phase, still finding their feet.

Mid-cap companies rarely command the same attention when investors are focused on a small group of market heavyweights. But with developed-market bond yields at their highest levels in more than two decades, earnings expectations for some large-cap companies are becoming harder to sustain, and with mid-caps continuing to trade at a discount to the ASX 50, investors now have reason to take a closer look.

Why a broader market is emerging 

According to the report, markets do not tend to stay this concentrated for long. 

While mega-cap companies have dominated the ASX 200's returns in recent years, history suggests periods where only a small number of stocks are driving the market tend to be the exception rather than the rule.

VanEck suggests that shifts have often emerged during periods of higher interest rates and slower economic growth, when investors become more selective about where earnings growth is likely to come from. 

In these environments, companies able to keep growing earnings even as conditions become more difficult tend to attract greater attention from investors focused on consistency rather than simply market size.

While sector performance has varied, periods of rising rates have often coincided with stronger returns from materials and strategies that spread investments more evenly across the market.

There are already signs that a shift may be emerging again. In the United States, a record share of S&P 500 companies has outperformed the index this year, reversing the unusually narrow leadership that defined much of the past two years.

What about in Australia?

VanEck reinforced that signs of that shift are already beginning to emerge in Australia. 

While large caps have outperformed since February reporting season, smaller companies delivered some of the market's strongest earnings surprises and most positive analyst target revisions. That suggests investors and analysts alike are beginning to see more room for earnings growth and share price improvement.

Importantly, many companies outside the largest stocks are still trading at cheaper valuations than the S&P/ASX 50, even though their earnings outlook has improved.

This matters because markets that rely too heavily on a small group of large companies can become more vulnerable, especially amid rising inflation, higher bond yields and geopolitical uncertainty.

As a result, ASX mid-cap companies may become increasingly important. They often offer a balance of stability and growth potential, while giving investors broader exposure beyond just the market's biggest names.

How to target ASX mid-caps 

For investors looking to target ASX mid-cap companies, one option to consider is the VanEck S&P/ASX MidCap ETF (ASX: MVE). 

It offers exposure to 50 established ASX-listed mid-cap companies across sectors, including industrials, healthcare, technology, resources and consumer businesses. 

According to VanEck, it provides investors with a diversified exposure to a segment of the market that has historically sat between the defensiveness of large caps and the growth potential of smaller companies.

The post Why ASX mid-cap shares are finally about to have their moment: Expert appeared first on The Motley Fool Australia.

Right now, these are three Australian ETFs I'd feel comfortable putting fresh money into.

VanEck Australian Quality ETF (ASX: AQLT)

The way I think about the VanEck Australian Quality ETF is simple. If I'm going to own Australian shares, I want to own the ones that actually earn their keep.

The AQLT ETF focuses on companies with high returns on equity, relatively low leverage, and more stable earnings profiles. That naturally tilts the portfolio toward businesses that generate real cash and can reinvest it sensibly. You see that reflected in the holdings, with exposure to names like BHP Group Ltd (ASX: BHP), Wesfarmers Ltd (ASX: WES), Telstra Group Ltd (ASX: TLS), the major banks, and Macquarie Group Ltd (ASX: MQG).

What I like about this ETF is that it avoids the temptation to chase whatever is fashionable. Instead, it leans into quality characteristics that tend to matter most over a full market cycle. It also ends up with different sector weightings compared to the S&P/ASX 200 Index (ASX: XJO), which can be useful if you already have exposure to traditional index funds.

For investors who want Australian equities without relying purely on market cap weighting, this feels like a sensible middle ground.

BetaShares S&P/ASX Australian Technology ETF (ASX: ATEC)

The BetaShares S&P/ASX Australian Technology ETF is at the other end of the spectrum, and that's why I like pairing it with something like the AQLT ETF.

This ETF gives you exposure to Australia's listed technology leaders, including businesses like Xero Ltd (ASX: XRO), WiseTech Global Ltd (ASX: WTC), REA Group Ltd (ASX: REA), Pro Medicus Ltd (ASX: PME), and TechnologyOne Ltd (ASX: TNE).

I don't expect this part of the market to move in a straight line. Tech never does. But over time, I think Australia's best technology companies can grow earnings much faster than the broader market, even if sentiment swings around in the short term.

The ATEC ETF also plays a useful portfolio role. Many Australian investors are heavily exposed to banks and resources by default. This ETF helps balance that out with businesses tied to digital adoption, healthcare technology, and online platforms.

VanEck S&P/ASX MidCap ETF (ASX: MVE)

If large caps are the heavyweights and small caps are the lottery tickets, mid-caps often sit in a sweet spot that doesn't get enough attention.

The VanEck S&P/ASX MidCap ETF tracks the S&P/ASX MidCap 50 Index (ASX: XMD), giving exposure to companies that are already established but still have room to grow. These are businesses that often sit just below the top 20, with proven operations and expanding markets.

The holdings reflect that mix. You get exposure to companies like Pilbara Minerals Ltd (ASX: PLS), Orica Ltd (ASX: ORI), Charter Hall Group (ASX: CHC), REA Group, JB Hi-Fi Ltd (ASX: JBH), and SGH Ltd (ASX: SGH). It's a broad cross-section of Australian industry, spanning resources, industrials, property, retail, and technology.

What appeals to me here is optionality. Some of these stocks will eventually grow into large-cap leaders. Others may simply compound steadily without ever being headline names. Either way, mid-caps can deliver attractive long-term returns if you're patient.

Foolish Takeaway

If I were adding to an ETF portfolio today, I'd want a mix of quality, growth, and opportunity beyond the biggest names.

The AQLT ETF gives me exposure to Australia's strongest businesses. The ATEC ETF adds long-term growth through technology leaders. The MVE ETF captures the potential of mid-sized companies that are still climbing.

Together, they offer diversification by style, sector, and company size, without needing to overcomplicate things. That's usually a good place to start.

The post The top Australian ETFs I would buy this week appeared first on The Motley Fool Australia.

While blue-chip stocks can be perceived as safer, they also often lack the upside of riskier, high-potential small-caps. 

However, data from VanEck shows that mid-cap companies might offer the best of both worlds. 

The VanEck S&P/ASX MidCap ETF (ASX: MVE) is one option for investors looking for exposure to 50 mid-cap companies. 

The fund is made up of essentially the 50 Australian stocks that are ranked 51-100 by market cap (so after the largest 50).

It has outpaced the S&P/ASX 200 Index (ASX: XJO) in the last 5 years. 

Here are three reasons it could continue. 

Mid-caps outperform when the economy expands

Mid-caps are more sensitive to changes in the economy than large-caps. 

When sentiment is positive and equities are rallying, mid-caps can outperform due to the exposure to industries like industrials and information technology. 

These sectors tend to do well when the economy is expanding.  

Favourable outlook 

Data from the ASX ETF provider shows mid-caps recorded the highest net earnings beats among all market segments, reinforcing their fundamental strength. 

What does this mean?

Essentially, mid-sized Australian companies have beaten profit expectations more often than small or large companies, suggesting these mid-cap firms are financially strong and performing well fundamentally.

These companies received higher target price revisions from sell-side analysts for the next 12 months, compared to the broader S&P/ASX 200 Index. This paints a favourable earnings and performance outlook for these companies.

Strong upside

Finally, at the time of writing, mid-caps are currently trading at more reasonable levels relative to their long-term averages. 

This means they are (overall) offering more attractive valuations than large-caps and the ASX 200. 

Essentially, if the economic growth continues, these stocks can have greater upside than other ASX 200 companies. 

What are the best mid-cap stocks?

There are some clear examples of mid-cap companies outpacing the market so far this year. 

• Lynas Rare Earths Ltd (ASX: LYC) is up more than 225% so far this year. 

• Evolution Mining Ltd (ASX: EVN) has risen more than 135%. 
• Charter Hall Group (ASX: CHC) has lifted approximately 55%. 

The VanEck MVE fund has a unique portfolio focused on mid-cap companies. 

There isn't another fund tracking the exact same index. 

However, if investors are looking for similar funds, another to consider would be the BetaShares Australian Ex-20 Portfolio Diversifier ETF (ASX: EX20). 

EX20 aims to track the performance of an index (before fees and expenses) comprising the 180 largest stocks listed on the ASX, after excluding the 20 largest, based on their market capitalisation.

The post 3 reasons this mid-cap ASX ETF can keep beating the ASX 200 appeared first on The Motley Fool Australia.

In July alone, Betashares data shows Australian investors poured a record $5.28 billion into ASX ETFs.

The benefits include easy diversification achieved in a single trade, for one brokerage fee, and low ongoing management fees.

As ASX ETFs proliferate, some investors are abandoning traditional unlisted managed funds because they prefer the ease, transparency, and lower costs of ETFs.

Investment manager GQG Partners Inc (ASX: GQG) highlighted this trend in its 1H FY25 report.

GQG Partners said the rising popularity of ETFs contributed to a 28% reduction in inflows into its managed portfolios over the period.

The company is adapting, and last month it launched its first active ETF for its US Equity strategy.

It's already attracted $200 million of inflows.

Companies like GQG Partners typically deal with high-net-worth individuals (HNWIs).

HNWI refers to people who have investable assets worth US$1 million or more.

HNWIs can afford professional advice and investment portfolio management.

So, it's interesting to look at which ASX ETFs HNWIs are buying, given they have access to the best advice and data available.

Data from AUSIEX shows 2 ASX ETFs were among the top 10 shares purchased by wealthy advised clients last month.

AUSIEX is a wholesale trading platform provider.

The data captured the buy orders of HNWI advised clients with self-managed superannuation funds above $3 million.

The 2 ASX ETFs in the top 10 were VanEck S&P/ASX MidCap ETF (ASX: MVE), ranked third, and VanEck Global Defence ETF (ASX: DFND), ranked eighth. You can check out the full top 10 list here.

Let's find out more about these two ASX ETFs.

VanEck S&P/ASX MidCap ETF (ASX: MVE)

The MVE is the only ETF that tracks the S&P/ASX MidCap 50 Index.

Van Eck says mid-caps are the 'sweet spot' in the market because they represent businesses with the spirit and growth potential of small companies and the maturity of large companies.

MVE ETF's portfolio spans a range of sectors, with industrials (19.5%), financials (17.7%), and materials (15.4%) the largest allocations.

Top holdings include Technology One Ltd (ASX: TNE), REA Group Ltd (ASX: REA), and JB Hi-Fi Ltd (ASX: JBH).

The fund has delivered an annualised return of 12.03% over the past decade to July 2025, including dividends.

It has $404.6 million in net assets, charges a management fee of 0.45% p.a., and distributes income twice yearly.

VanEck Global Defence ETF (ASX: DFND)

The DFND ETF gives investors targeted exposure to 31 leading global defence companies.

The ETF tracks the MarketVector Global Defence Industry (AUD) Index.

The DFND ETF is benefiting from the global defence investment theme.

More than half of the stocks this ETF is exposed to are in the US. The rest are in France, Italy, South Korea, and other nations.

Key holdings include AI and defence software firm Palantir Technologies Inc (NASDAQ: PLTR), US missile and aerospace giant RTX Corp (NYSE: RTX), and Italian aerospace and defence group Leonardo SpA (FRA: FMNB).

Since its inception in September 2024, DFND has returned 81% to June 2025, including dividends.

It has $197.1 million in net assets, a management fee of 0.65% p.a., and pays annual distributions.

The post Which ASX ETFs are wealthy investors buying in FY26? appeared first on The Motley Fool Australia.