In fact, ASX small-cap shares outperformed the larger companies by almost 2.5 times in 2025. 

The S&P/ASX All Ords Index (ASX: XAO) delivered total returns (capital growth plus dividends) of 10.56% last year.

This index contains the 500 largest ASX listed companies, and accounts for roughly 84% of Australia's equity market. 

Meanwhile, the S&P/ASX Small Ords Index (ASX: XSO), which tracks companies ranked 101 to 300 by market cap, delivered a total return of 24.96%.

However, it appears the pendulum has now swung the other way in 2026. 

Since the start of the year, the Small Ords Index has dropped approximately 12%. 

This fall is significantly further than the All Ords Index which is down roughly 3% in the same period. 

Why are they struggling in 2026?

A small-cap stock typically has a market capitalisation ranging from a few hundred million to $2 billion.

Subsequently, these companies are much more sensitive to interest rates than bigger companies.

One reason for this is that these stocks rely more on debt and external funding. 

Additionally, many are not yet profitable, which means valuations depend heavily on future growth.

In 2026, Australia has seen elevated inflation, causing the RBA to deliver two interest rate hikes.

It seems markets are now repricing for tighter financial conditions, causing smaller companies to be hit disproportionately. 

In essence, the Small Ords Index isn't falling because "small caps are broken" – it's falling because:

• Macro conditions are flipping against them
• Liquidity is tightening
• Risk appetite dropped suddenly.

Is there any upside?

With many small-caps falling throughout the start of 2026, investors might be considering swooping in on what could appear to be a relative value. 

Some notable ASX small-caps that have fallen include: 

• Web Travel Group Ltd (ASX: WEB)
• Catapult Sports Ltd (ASX: CAT)
• Elders Ltd (ASX: ELD). 

These companies have drawn some positive outlooks from brokers, however it's important to consider that in the short term, returns could be minimal, if these economic conditions persist.

Alternatively, if investors are aiming for a more broad, diversified entry into the small-cap market, there are several ASX ETFs to consider: 

• iShares S&P/ASX Small Ordinaries ETF (ASX: ISO) – designed to track the performance of small-capitalisation Australian equities included in the S&P/ASX 300 index, but not in the S&P/ASX 100 index.
• Vanguard MSCI Australian Small Companies Index ETF (ASX: VSO) – Tracks the MSCI Australian Shares Small Cap Index. 
• VanEck Vectors Small Companies Masters ETF (ASX: MVS) – offers exposure to a diversified portfolio of roughly 61 ASX-listed small companies. 

The post What's happened to ASX small-caps in 2026? appeared first on The Motley Fool Australia.

It's been well documented the run being enjoyed by BHP Group Ltd (ASX: BHP) and Rio Tinto Ltd (ASX: RIO). 

These two ASX mining giants are both hovering around all-time highs. 

Analysis from Betashares indicates this bull run could continue in 2026. 

Changing of the guard for Australian large caps

Tom Wickenden, investment strategist at Betashares said in a report earlier this week that strong momentum in resource prices underpin the firm's positive outlook. 

Iron ore has rallied and is holding above US$100 per tonne.

While further upside could be limited, he believes current levels support strong profitability for Australia's large-cap miners.

He also reinforced the strategic pivot of Australia's miners toward copper.

According to the report, BHP is now the world's largest copper producer, with the metal contributing 45% of its earnings, up from 29% a year ago. 

Rio Tinto's copper assets currently contribute ~15% of group earnings, but production is expected to grow significantly through to 2030. 

It could also be boosted further by a possible acquisition of Glencore plc (LSE: GLEN).

Mr Wickenden also said copper prices are at all-time highs.

Supply is constrained by multi-year project lead times, while demand is driven by the AI infrastructure buildout and energy transition.

For these reasons, we believe materials will drive large-cap returns in 2026, a notable shift from recent history. Over the last two years, financials accounted for 60% of the ASX 200's gains led by the 'Big 5'. While financials earnings expectations remain solid at 6.9% (which we expect can be met), we see meaningfully greater upside in materials given their earnings inflection from -18.0% in FY25 to 19.4% in FY26.

Commodities surge impact for small-caps

While Betashares now tips large-cap miners to lead the way in 2026, the report also said the rally in gold and critical minerals is set to be a key driver of Australian mid and small-cap outperformance in 2026.

The report said Australia's gold exports are expected to grow by ~47% in FY25/26, surpassing coal and natural gas to become our second-largest export behind iron ore. 

Meanwhile, the October 2025 US-Australia Critical Minerals Framework, an US$8.5 billion partnership focused on rare earths and critical minerals including lithium and graphite, positions Australia as a strategic partner in countering China's dominance in processing capacity. 

With escalating US-China trade tensions, we expect critical minerals to remain a focal point of geopolitical competition and national stockpiling.

Ultimately, mid and small-cap indices are positioned to benefit from this commodity rally. 

How do investors gain exposure?

The tailwinds benefiting small-cap stocks have been well documented.

For investors looking to capture exposure to this sector, there are a few options. 

BetaShares Australian Small Companies Select Fund (ASX: SMLL) provides access to a tailored portfolio of high-quality, profitable small-cap Australian companies. 

Another option for Australian small-cap exposure is VanEck Vectors Small Companies Masters ETF (ASX: MVS). 

For investors more focused on commodities, Betashares Energy Transition Metals ETF (ASX: XMET) offers exposure to global producers of copper, lithium, nickel, cobalt, graphite, manganese, silver, and rare earths elements.

Global X Green Metal Miners ETF (ASX: GMTL) offers exposure to global companies that produce critical metals for clean energy infrastructure and technologies, including lithium, copper, nickel, and cobalt.

It's worth noting these ASX ETFs do not exclusively target Australian critical minerals. 

The post Why 2026 will be the year of ASX resources and commodities – Expert appeared first on The Motley Fool Australia.

Throughout 2025, themes that brought big returns included gold, silver and other commodities. 

Similarly, global defence shares skyrocketed due to government spending and key contracts. 

For investors looking to gain access to these kinds of themes or sectors, ASX ETFs provide exposure to a group of similar stocks in one trade. 

With that in mind, here are three examples of such funds from VanEck that performed well in 2025. 

VanEck Investments Limited – VanEck Vectors Gold Miners ETF (ASX: GDX)

Gold shares emerged as one of the clear share market winners last year. 

This fund from VanEck was able to capture those gains. 

It is made up of a portfolio of 92 companies involved in the gold mining industry. 

These companies are mostly based in Canada (45%), United States (21%) and Australia (10%). 

This fund rose an astonishing 131% over the last 12 months. 

VanEck Australian Resources ETF (ASX: MVR)

This ASX ETF has been hotly covered in the past year as it captured the tailwinds in Australia's resources sector. 

As the name suggests, this fund offers exposure to 32 ASX-listed resources companies. 

According to VanEck, this includes companies focused on physical energy commodities (such as coal, oil, gas and uranium) related services and equipment (such as drilling, pipelines, storage and transportation), power generation and renewable energy. 

It also holds companies focused on mining and resources (such as iron ore, coal, precious metals and other minerals) and mining related services and equipment (such as drilling, explosives, transportation and producers of mining machinery).

This fund includes blue-chip companies like BHP Group (ASX: BHP), Fortescue Metals Group (ASX: FMG) and Rio Tinto Limited (ASX: RIO). 

It allows investors to access these big fish in one trade. 

Over the past year, this fund has risen more than 35%. 

VanEck Vectors Small Companies Masters ETF (ASX: MVS)

Another emerging story in 2025 was the impressive performance of ASX small-cap stocks. 

This fund captured that performance for investors, rising more than 20% in the last year. 

The fund is made up of 58 small-cap companies across a wide range of sectors including healthcare, industrials, resources, technology, energy and more. 

The post 3 of the best performing VanEck ASX ETFs in the last year appeared first on The Motley Fool Australia.

Traditionally, small-cap stocks have a market capitalisation ranging from a few hundred million to $2 billion.

The upside can be greater for these companies that still are largely unproven or are perhaps yet to generate profit.

But they also tend to be more volatile than larger-cap stocks.

The dust settles after earnings season

The report from VanEck shows the market reaction to earnings season was more intense than in years gone by. 

According to the ETF provider, most companies (62%) reported in-line results, with 22% delivering beats and slightly outpacing misses (16%).

However, VanEck suggests market reactions did not reflect this 'solid' result. 

One in five reporting companies moved more than 10% after they announced their results. 

Analysing the results on a market-weighted basis, mid-cap companies, as represented by the S&P/ASX MidCap 50 Index, led earnings beats this season, with a net-beat rate of 2.9% versus the S&P/ASX 200 Index's 1.15%.

Small caps battered but not beaten

VanEck also said that small caps, as represented by the companies in the S&P/ASX Small Ordinaries Index (ASX: XSO), performed the worst from an earnings per share (EPS) surprise perspective.

What is interesting is that after the earnings season, an analysis of the consensus 12-month price targets shows that small caps sit highest.

The outlook for small companies is brighter. The RBA is starting to cut rates, lowering capital costs. The economic outlook has led to small companies having the highest price-target revisions, signalling the market's conviction in Australian small caps.

VanEck said that historically, during this type of cycle, small caps have offered more upside than large caps because they have fallen further or not kept pace with large caps as GDP growth slowed. 

Importantly, the provider did also reinforce that the Small Ords has delivered lower cumulative returns relative to the broader, large-cap dominated S&P/ASX 200 Index (ASX: XJO) over the long term.

This reflects the volatility that may come with this investment class compared to blue-chip stocks.

How do investors gain exposure?

Based on the research from VanEck, investors who have been eyeing specific small caps may be well-positioned to buy the dip, with economic tailwinds potentially coming in the short term. 

Alternatively, there are ASX ETFs that offer more diversified exposure to the small-cap sector. 

For example, the VanEck Vectors Small Companies Masters ETF (ASX: MVS). 

It tracks an index consisting of 60 small-cap ASX-listed companies domiciled in Australia or New Zealand with strong growth characteristics and sound fundamental indicators of quality.

It has a very evenly distributed portfolio, with its largest exposure representing just 2.7% of the fund. 

The fund has risen more than 17% YTD. 

Other ASX ETFs tracking small-caps include: 

• SPDR S&P/ASX Small Ordinaries Fund (ASX: SSO) – Tracks the returns of the Small Ordinaries Index, which are companies included in the S&P/ASX 300 Index (ASX: XKO), but not in the S&P/ASX 100 Index (ASX: XTO).
• iShares S&P/ASX Small Ordinaries ETF (ASX: ISO) – Also measures the performance of small-capitalisation Australian equities included in the ASX 300 Index, but not in the ASX 100 Index.
• Vanguard MSCI Australian Small Companies Index ETF (ASX: VSO). 

The post Why now is a good time to turn to small-cap ASX ETFs appeared first on The Motley Fool Australia.

Investors in the VanEck Morningstar Wide Moat (AUD Hedged) ETF (ASX: MHOT) will receive the largest payment of $10.99 per unit.

Those who hold the unhedged VanEck Morningstar Wide Moat ETF (ASX: MOAT) will get the second-highest distribution of $7.56 per unit.

These two ETFs are different in that they do not try to mirror the performance of a major index like the S&P/ASX 200 Index (ASX: XJO).

Instead, the MOAT ETFs track about 50 US shares that have significant competitive advantages, or in other words, a wide 'moat'.

The wider the moat, the more protected a company's brand and its products or services are from competitors in the marketplace.

Here is a summary of VanEck ETFs that will be paying dividends to investors today.

It's payday for VanEck ASX ETF investors!

VanEck Global Clean Energy ETF (ASX: CLNE) will pay 7 cents per unit.

VanEck FTSE China A50 ETF (ASX: CETF) will pay $1.27 per unit.

VanEck Global Defence ETF (ASX: DFND) will pay 3 cents per unit. Find out more about this ETF here.

VanEck Morningstar Australian Moat Income ETF (ASX: DVDY) will pay 20 cents per unit.

VanEck MSCI International Sustainable Equity ETF (ASX: ESGI) will pay $2.34 per unit.

VanEck Video Gaming and Esports ETF (ASX: ESPO) will pay $1.04 per unit.

VanEck Gold Miners ETF (ASX: GDX) will pay 63 cents per unit.

VanEck Morningstar International Wide Moat ETF (ASX: GOAT) will pay $1.66 per unit.

VanEck MSCI Australian Sustainable Equity ETF (ASX: GRNV) will pay 57 cents per unit.

VanEck 5-10 Year Australian Government Bond ETF (ASX: 5GOV) will pay 11.5 cents per unit.

VanEck Global Healthcare Leaders ETF (ASX: HLTH) will pay 2 cents per unit.

Here are a few more…

VanEck Australian Property ETF (ASX: MVA) will pay 42 cents per unit.

VanEck Australian Banks ETF (ASX: MVB) will pay 40 cents per unit.

VanEck Australian Resources ETF (ASX: MVR) will pay 51 cents per unit.

VanEck Small Companies Masters ETF (ASX: MVS) will pay 32 cents per unit.

VanEck MSCI International Small Companies Quality ETF (ASX: QSML) will pay 9 cents per unit.

VanEck MSCI International Quality ETF (ASX: QUAL) will pay $1.23 per unit.

VanEck MSCI International Value ETF (ASX: VLUE) will pay $1.02 per unit.

VanEck ETFs among the market's top performers in FY25

According to ASX data, there were two VanEck ETFs among the six best-performing ETFs holding Aussie shares in FY25.

Ranked 4th, the VanEck Australian Banks ETF delivered a total annual return of 24.86%.

Ranked 6th, the VanEck Australian Property ETF produced a total annual return of 22.92%.

Another two VanEck ETFs featured in the six best-performing ETFs holding international shares in FY25.

Check them out here.

The post Invested in ASX MOAT or other VanEck ETFs? It's dividend day! appeared first on The Motley Fool Australia.

The ex-dividend date for the distributions listed below is today, 1 July. The record date is 2 July.

The payment date is 25 July.

The biggest payment amount on the VanEck distribution list is a whopper at $10.99 per unit.

That will be paid to investors who own VanEck Morningstar Wide Moat (AUD Hedged) ETF (ASX: MHOT).

Investors in the unhedged version, the VanEck Morningstar Wide Moat ETF (ASX: MOAT), will receive the second-highest distribution of $7.56 per unit.

The VanEck Wide Moat ETFs are a bit different to the norm. They do not seek to track the performance of a major index, like most ETFs.

Instead, the ETFs hold a portfolio of about 50 US shares that have significant competitive advantages, or in other words, a wide moat.

Here is a condensed list of VanEck ETFs and how much each ETF will pay in dividends to their investors later this month.

Payday for VanEck ASX ETF investors

VanEck Global Clean Energy ETF (ASX: CLNE) will pay 7 cents per unit.

VanEck FTSE China A50 ETF (ASX: CETF) will pay $1.27 per unit.

VanEck Global Defence ETF (ASX: DFND) will pay 3 cents per unit. Learn more about this ETF here.

VanEck Morningstar Australian Moat Income ETF (ASX: DVDY) will pay 20 cents per unit.

VanEck MSCI International Sustainable Equity ETF (ASX: ESGI) will pay $2.34 per unit.

VanEck Video Gaming and Esports ETF (ASX: ESPO) will pay $1.04 per unit.

VanEck Gold Miners ETF (ASX: GDX) will pay 63 cents per unit.

VanEck Morningstar International Wide Moat ETF (ASX: GOAT) will pay $1.66 per unit.

VanEck MSCI Australian Sustainable Equity ETF (ASX: GRNV) will pay 57 cents per unit.

VanEck 5-10 Year Australian Government Bond ETF (ASX: 5GOV) will pay 11.5 cents per unit.

VanEck Global Healthcare Leaders ETF (ASX: HLTH) will pay 2 cents per unit.

Show us the money! Here are some more…

VanEck Australian Property ETF (ASX: MVA) will pay 42 cents per unit.

VanEck Australian Banks ETF (ASX: MVB) will pay 40 cents per unit.

VanEck Australian Resources ETF (ASX: MVR) will pay 51 cents per unit.

VanEck Small Companies Masters ETF (ASX: MVS) will pay 32 cents per unit.

VanEck MSCI International Small Companies Quality ETF (ASX: QSML) will pay 9 cents per unit.

VanEck MSCI International Quality ETF (ASX: QUAL) will pay $1.23 per unit.

VanEck MSCI International Value ETF (ASX: VLUE) will pay $1.02 per unit.

The post VanEck ASX ETF dividends: How much you'll get and when appeared first on The Motley Fool Australia.

The reasoning is that they have underperformed compared to their larger cap sisters over the last two years as inflation and rising interest rates forced investors to flee for more conservative options.

But now with the tantalising prospect of rate cuts looming, it could be time for sweet revenge.

"The fundamental setup for small cap returns in 2024 is compelling," the analysts at LSN said in a memo to clients.

"Valuations are attractive, the earnings outlook is robust, and tailwinds from an improved economic backdrop historically provide active small cap managers with outsized returns."

They noted that even Australia's sovereign wealth fund, the Future Fund, has started a new program to buy small-cap ASX shares. 

"ASX small caps have underperformed the ASX top 100 by 25% since August 2021 and are now trading at substantial discount, despite the outlook for significantly more earnings growth," read the LSN memo.

"This has not gone unnoticed in capital markets with a recent flurry of M&A from financial investors and industry players taking advantage of the environment."

How to grab a piece of the small-cap action

So, if you believe in this thesis, how do you take advantage?

Of course, you can buy ASX small caps directly. But that requires much research and due diligence, which is all the more harder with less information available to the public than the big businesses.

One shortcut might be to buy an exchange-traded fund (ETF) that invests in smaller ASX businesses.

As well as cutting down on the required research, such funds have the advantage of providing immediate diversification to potentially smooth out the volatility of individual stocks.

Here are four ETFs on the ASX that invest in small-cap equities:

The post Which ASX ETFs could explode if small caps surge in 2024? appeared first on The Motley Fool Australia.