It's always fun to focus on the winners. However looking at traditionally strong sectors that underperformed this year can help reveal future opportunities. 

One way to target these sectors is by looking at ASX ETFs that track these indexes or themes. 

Here are three ASX ETFs that have historically performed well, however underperformed this year. Could they bounce back in 2026?

BetaShares S&P/ASX 200 Financials Sector ETF (ASX: QFN)

This ASX ETF aims to track the performance of the S&P/ASX All Technology Index (before fees and expenses). 

The Index provides exposure to leading ASX-listed companies in a range of tech-related market segments such as information technology, consumer electronics, online retail and medical technology.

The fund has returned almost 14% per annum (after fees) since launching in 2020. 

Since its inception, it is up more than 80%. 

However in 2025 it is down 12.6%. 

It's no surprise this fund has struggled, as its largest exposure is to WiseTech Global Ltd (ASX: WTC), Computershare Ltd (ASX: CPU), and Xero Ltd (ASX: XRO). 

However these technology companies have all been tipped to rebound next year, making this ASX ETF a tempting buy-low option. 

Vanguard Australian Property Securities Index ETF (ASX: VAP)

This fund seeks to track the return of the S&P/ASX 300 A-REIT Index. 

This fund offers a diversified blend of Australian real estate investment trusts (A-REITs) with residential, office, retail, and industrial assets.

It is made up of 31 holdings, with its largest allocation being to Goodman Group (ASX: GMG) which makes up roughly 33% of the fund. 

In 2025 the fund has risen by a modest 2.2%. 

It has dropped almost 8% since late October. 

However since its inception in 2010, it has returned approximately 10% per annum.

BetaShares FTSE RAFI U.S. 1000 ETF (ASX: QUS)

This fund provides exposure to 500 leading listed US companies, with each holding in the index weighted equally. 

This ASX ETF rose just 1.9% in 2025 despite the S&P 500 Index (SP: .INX) rising almost 17% in the same span. 

It appears that this fund's equal weight method worked against it this year. 

However, according to Betashares, it has generated annualised returns of 13.29% over the past 5 years.

Therefore, it could be another candidate to rebound next year. 

The post Could these ASX ETFs be set for a rebound in 2026? appeared first on The Motley Fool Australia.

However, the level of diversification may fall short of investors' expectations, if purchased today. 

Why?

Market capitalisation weighted

When it comes to portfolio diversification, the weighting of individual stocks matters just as much as the number of stocks. 

The iShares S&P 500 AUD ETF contains 500 companies in the ETF, which may appear to be more than adequate diversification on the surface. After all, most experts recommend holding between 20-25 stocks for maximum diversification benefits. 500 holdings is certainly well above that. 

However, this oversimplification ignores how they are weighted. The IVV ETF is weighted by market capitalisation. That means the largest companies are given the biggest representation. 

As of June 2025, the top 10 companies make up around 40% of the S&P 500. 

The top 5 holdings in June were  Nvidia Inc (NASDAQ: NVDA) at 7.3%, Microsoft Corp (NASDAQ: MSFT) at 7.0% , 5.8% to Apple Inc (NASDAQ: AAPL), 3.9% to Amazon Inc (NASDAQ: AMZN), and 3.0% to Meta Platforms (NASDAQ: META).

Notably, a recent report by Goldman Sachs found that concentration had reached a level not seen since 1932. This has been driven by incredibly strong performance in large capitalisation stocks in recent years. Over the past 5 years, the S&P 500 has generated an annualised return of 16%, compared to its 30-year average of 10%. The top 10 stocks accounted for more than a third of that gain.

Sector concentration

The other important aspect to consider is the level of correlation between the top 10 companies in the S&P 500.

Correlation is a statistical measure of how two investments move together. When correlation is high, they rise and fall together. 

Companies in the same sector are often highly correlated. 

In the case of the S&P 500, every top 10 company except Berkshire Hathaway Inc (NYSE: BRK.A)(BRK.B) is a technology company. Therefore, any factors impacting the technology sector will have a material impact on the IVV ETF returns. This could be a range of factors including regulatory changes or technology disruption. Investors experienced this back in February with the sudden arrival of DeepSeek.

How to improve diversification?

Given these conditions, IVV ETF investors may be wondering how to improve diversification. 

Investors looking to invest in an S&P 500 focused ETF today should consider the BetaShares S&P 500 Equal Weight ETF (ASX: QUS). Just like the IVV ETF, it provides exposure to the largest 500 US companies. However, each holding is equally weighted. That means, it also holds the largest technology companies, but they are weighted the same as all the other stocks in the ETF. 

Should there be a material decline in the US technology sector, the QUS ETF would likely fare much better than the IVV ETF.

The post Why S&P 500 focused IVV ETF isn't as diversified as you might think appeared first on The Motley Fool Australia.

That's because ASX ETFs offer a diversified and less stressful approach to investing – especially if you're not a fan of stock picking.

With that in mind, here are five fantastic ASX ETFs to consider right now.

Betashares Nasdaq 100 ETF (ASX: NDQ)

The first ASX ETF to look at is the Betashares Nasdaq 100 ETF. It provides exposure to 100 of the biggest non-financial companies listed on the Nasdaq exchange in the U.S. That means you get a slice of Apple (NASDAQ: AAPL), Microsoft (NASDAQ: MSFT), Nvidia (NASDAQ: NVDA), Amazon (NASDAQ: AMZN), Meta (NASDAQ: META), and Tesla (NASDAQ: TSLA), along with other cutting-edge innovators. With the tech sector hit hard in recent months, the Betashares Nasdaq 100 ETF is trading well below its peak – making it a potentially savvy buy for long-term investors who believe in the future of artificial intelligence, cloud computing and digital commerce.

Betashares Australian Quality ETF (ASX: AQLT)

Another ASX ETF to consider buying is the Betashares Australian Quality ETF. It screens the ASX for high-quality businesses with strong profitability, low debt, and stable earnings. It could be a great way to access companies that have stood the test of time. Included in the fund are names like ResMed Inc (ASX: RMD), REA Group Ltd (ASX: REA), and Goodman Group (ASX: GMG) – companies known for innovation, earnings resilience, and global competitiveness.

Betashares Global Cash Flow Kings ETF (ASX: CFLO)

Another ASX ETF to look at is the Betashares Global Cash Flow Kings ETF. It screens for global companies that generate consistently strong free cash flow. Why does that matter? Because businesses that churn out reliable cash flow tend to withstand market turbulence better than their overleveraged peers. This ultimately means that the Betashares Global Cash Flow Kings ETF catches the strongest, most efficient businesses around the globe — including familiar names like Meta Platforms, Alphabet (NASDAQ: GOOG), and Visa (NYSE: V). Betashares recently named it as one to buy.

iShares S&P 500 Equal Weight ETF (ASX: QUS)

This isn't your regular S&P 500 ETF. Instead of being weighted by market size (which gives heavy exposure to big tech), the iShares S&P 500 Equal Weight ETF gives each company in the index an equal say. That means smaller and mid-sized businesses get a fair go, which can be particularly helpful when the giants stumble. You still get exposure to the biggest U.S. companies, just without all your eggs in a handful of tech baskets.

Betashares Crypto Innovators ETF (ASX: CRYP)

Finally, if you are feeling a bit adventurous, then the Betashares Crypto Innovators ETF might scratch that itch. This ASX ETF gives you exposure to companies innovating in blockchain and digital assets – think Coinbase (NASDAQ: COIN) and MicroStrategy (NASDAQ: MSTR). It has been a wild ride, no doubt, but for investors who believe in the long-term potential of crypto-related infrastructure, this fund could add a bold growth kicker to your ASX ETF portfolio.

The post 5 fantastic ASX ETFs to buy with $5,000 appeared first on The Motley Fool Australia.

But there's a simple, smart way to build long-term wealth without getting overwhelmed — and it starts with exchange-traded funds (ETFs).

ETFs let you invest in a wide range of companies with a single trade. They offer instant diversification, low costs, and exposure to powerful long-term themes — all ideal features for beginner investors.

Here are three high-conviction ASX ETFs that I think are particularly well-suited for new investors looking to build a strong foundation for their portfolio.

Betashares Nasdaq 100 ETF (ASX: NDQ)

If you believe in the future of innovation, you'll want exposure to the Nasdaq 100 — and that's exactly what this ASX ETF delivers. It tracks some of the world's most powerful and disruptive tech companies, including Apple (NASDAQ: AAPL), Microsoft (NASDAQ: MSFT), Nvidia (NASDAQ: NVDA), Amazon (NASDAQ: AMZN), and Alphabet (NASDAQ: GOOG).

These aren't just buzzwords — they are businesses that shape how we live, work, and consume. And despite some short-term volatility, they've been consistent long-term performers.

For beginners, this ASX ETF offers an easy way to invest in global tech giants without the risk of picking individual winners. It is growth-focused, future-facing, and an excellent core holding for anyone with a long time horizon.

Betashares Global Cybersecurity ETF (ASX: HACK)

Cybersecurity is no longer optional — it is essential. And that makes Betashares Global Cybersecurity ETF a very timely and relevant ASX ETF.

This fund provides exposure to a specialised basket of global cybersecurity companies, including names like CrowdStrike (NASDAQ: CRWD), Palo Alto Networks (NASDAQ: PANW), Fortinet (NASDAQ: FTNT), and Okta (NASDAQ: OKTA). As more of the world moves online, demand for security infrastructure is expected to soar.

This popular ETF taps into a structural growth theme with real-world importance. For beginner investors, it is a great way to participate in the digital security boom without needing to understand the tech behind it.

Betashares S&P 500 Equal Weight ETF (ASX: QUS)

Finally, most U.S. market ASX ETFs are weighted heavily toward mega-cap names like Apple, Microsoft, and Nvidia — which means they can become concentrated in just a few stocks. The Betashares S&P 500 Equal Weight ETF takes a different approach, giving equal weight to every company in the S&P 500.

That means your exposure is spread evenly across big and mid-sized names, from tech giants to industrials, healthcare, consumer staples, and more. It reduces single-stock risk and gives you broader diversification across the entire U.S. economy. This ASX ETF was recently named as one to buy by Betashares.

The post 3 high-conviction ASX ETFs for beginners to buy appeared first on The Motley Fool Australia.

The S&P 500, which represents America's 500 largest companies, fell another 1.7% last night to close at 4,982.77. The index is now down 18.9% from its all-time high of 6,144.15, reached in mid-February. It is also on the cusp of entering a bear market, defined as a decline of more than 20% from its recent peak. 

Several ASX exchange-traded funds (ETFs) provide ASX investors with exposure to America's 500 largest companies. Those wanting to increase their exposure to these companies should familiarise themselves with the differences between the ETFs, which could materially impact forward returns. 

Capitalisation-weighted vs equal-weighted

The first distinction concerns how the weights are chosen for each of the 500 companies. 

Like most ASX index ETFs, the iShares S&P 500 AUD ETF (ASX: IVV) is market capitalisation weighted. This means every holding is exactly proportional to its weighting in the S&P 500 Index. As of March 2025, its top five holdings are Apple Inc (7.00%), Microsoft Corp (5.85%), Nvidia Corp (5.57%), Amazon.com Inc (3.76%), and Meta Platforms Inc (2.65%). 

An alternative option is the equal-weighted version. The BetaShares S&P 500 Equal Weight ETF (ASX: QUS) holds the same 500 companies, except each holding carries an equal weighting. This means that the index's five largest companies each represent less than 0.3% of the ETF. The portfolio is rebalanced quarterly to maintain these weights. 

Over the past two years, the largest technology companies have outperformed the index. However, this year, those same companies have been among the biggest detractors. For example, Apple is down nearly 30%, while Tesla has fallen 42%.

Therefore, it's no surprise that the equally weighted QUS ETF has outperformed the market capitalization-based IVV ETF for the year to date. QUS has fallen 7.4%, compared to 11% for IVV.

Investors who believe the largest US companies are now undervalued relative to the market should buy the IVV ETF. However, those who believe they will continue to underperform the market should go with the QUS ETF.

Hedged vs unhedged

Another consideration is currency. With the Australian dollar relative to the US dollar trading at below 60 cents for the first time since COVID, investors may be reluctant to invest in the US. The iShares S&P 500 (AUD Hedged) ETF (ASX: IHVV) provides exposure to the S&P 500 Index while mitigating currency risk for Australian investors. It is also market capitalisation weighted. 

For the year to date, the IHVV ETF is down 13.28%, underperforming the IVV ETF. However, if the Australian dollar were to strengthen, investors could benefit from buying IHVV units at today's price.

Foolish Takeaway

The S&P 500 Index hasn't traded this low in a year. Investors looking to invest in America's 500 largest companies may be looking at ASX ETFs. Those with a view on how the largest companies might perform from here, or on currency, should select their ASX ETFs accordingly.

The post S&P 500 Index reaches 1 year low: Are you looking to buy US focused ASX ETFs? appeared first on The Motley Fool Australia.

But don't worry if you're not a fan of stock picking. That's because exchange-traded funds (ETFs) are here to make life easier by allowing you to buy large numbers of quality shares in one fell swoop.

If you're looking for ASX ETFs to buy and hold for the next decade, here are three that could deliver strong returns over time.

Betashares Crypto Innovators ETF (ASX: CRYP)

The cryptocurrency industry has had its fair share of ups and downs, but long-term believers see it as a transformative force in global finance and technology. The Betashares Crypto Innovators ETF offers Aussie investors a way to gain exposure to the crypto economy without directly buying digital assets.

This ASX ETF invests in companies that are deeply involved in the cryptocurrency ecosystem, including exchanges, mining operations, and blockchain technology firms. While the crypto market is known for volatility, history shows that every major crypto downturn has been followed by strong recoveries. For investors willing to ride the waves, this fund could be a lucrative long-term bet as blockchain adoption continues to expand globally.

BetaShares S&P 500 Equal Weight ETF (ASX: QUS)

For those seeking broad exposure to the US market with a unique twist, the BetaShares S&P 500 Equal Weight ETF is worth considering. Unlike traditional ASX ETFs that track the S&P 500 with a market-cap weighting, this fund gives every stock in the index an equal allocation.

This equal-weight approach reduces concentration risk, ensuring that your returns aren't overly dependent on just a handful of mega-cap tech giants. It also historically provides better returns in periods when smaller and mid-sized companies outperform the biggest players. If you believe in the long-term strength of the US economy but want a more balanced approach, BetaShares S&P 500 Equal Weight ETF could be a great fit for your portfolio. Betashares has tipped it as one to buy recently.

Betashares Cloud Computing ETF (ASX: CLDD)

Cloud computing has become the backbone of modern technology, powering everything from streaming services to artificial intelligence. The Betashares Cloud Computing ETF provides exposure to leading cloud technology providers, including data centres, infrastructure-as-a-service companies, and software platforms. Betashares recently named it as one to buy.

As businesses continue their digital transformations, demand for cloud services is expected to grow exponentially. With Amazon Web Services, Microsoft Azure, and Google Cloud at the forefront of this shift, Betashares Cloud Computing ETF offers a way to capitalise on one of the biggest technological megatrends of the decade. Also included are the likes of Snowflake (NYSE: SNOW) and Shopify (NYSE: SHOP).

The post Buy and hold these excellent ASX ETFs for 10 years appeared first on The Motley Fool Australia.

But which ones could be top picks for investors in March? Let's take a look at three that could be worth considering for a balanced investment portfolio. They are as follows:

BetaShares Crypto Innovators ETF (ASX: CRYP)

The cryptocurrency sector has been making waves again, and political developments in the United States could further boost its momentum.

One of Donald Trump's key election promises was to make the US "the crypto capital of the planet," and this pledge helped drive Bitcoin to record highs in late 2024. And with Trump now in the Oval Office, it wouldn't be surprising if further records were broken in the future.

For investors seeking indirect exposure to this booming sector, the BetaShares Crypto Innovators ETF could be a top option. Rather than investing directly in digital assets, this fund provides exposure to companies that are deeply involved in the crypto ecosystem, such as cryptocurrency miners, trading platforms, and infrastructure developers.

This makes it an accessible way to participate in the long-term growth of digital assets while mitigating some of the volatility associated with holding cryptocurrencies directly.

BetaShares S&P 500 Equal Weight ETF (ASX: QUS)

Over the past few years, the US stock market has been dominated by technology giants such as Apple (NASDAQ: AAPL), Microsoft (NASDAQ: MSFT), and Nvidia (NASDAQ: NVDA). However, with interest rates expected to decline, there could be a shift towards value-oriented sectors like financials, utilities, and industrials, which tend to benefit from lower borrowing costs and increased consumer spending.

The BetaShares S&P 500 Equal Weight ETF offers investors a unique way to gain exposure to the US stock market while reducing concentration risk. Unlike traditional S&P 500 index funds that are heavily skewed towards the largest tech stocks, this fund equally weights all 500 companies in the index. As of 31 December 2024, its tech exposure stood at 13.8%, compared to 32% for a standard S&P 500 tracker.

By spreading its allocation evenly, this fund provides a more balanced exposure across sectors, ensuring investors can capitalise on a broad-based market rally rather than relying on the performance of a handful of mega-cap stocks.

This fund was recently named as one to buy by analysts at Betashares.

BetaShares Global Quality Leaders ETF (ASX: QLTY)

Finally, investors that are looking for a diversified, high-quality global portfolio might want to consider the BetaShares Global Quality Leaders ETF.

This ASX ETF focuses on companies with strong balance sheets, high profitability, and competitive advantages, making it ideal for long-term investors who prioritise stability and resilience.

The fund, which was also tipped as one to buy by Betashares, includes leading global businesses across multiple industries and regions, offering investors exposure to proven performers that have historically demonstrated strong earnings growth and financial discipline.

The post 3 fantastic ASX ETFs for Aussie investors to buy in March appeared first on The Motley Fool Australia.

Let's take a look at a few that Betashares has picked out for investors to consider in 2025. They are as follows:

Betashares Global Cybersecurity ETF (ASX: HACK)

Betashares highlights that cybersecurity demand is growing fast and still has a long way to go.

In light of this, it thinks that the Betashares Global Cybersecurity ETF could be a great ASX ETF to buy in 2025. It said:

The digital age, along with its incredible opportunities and innovations, has ushered in an era in which data breaches and cyber threats run rampant. Cybercrime is projected to cost the global economy a staggering US$10 trillion or more annually by this year, underscoring the critical need for robust cybersecurity solutions.

Investing in the cybersecurity sector offers investors a strategic opportunity to tap into the escalating demand created by cyber threats. HACK Global Cybersecurity ETF makes investment in this thematic easy, providing exposure to a diversified portfolio of leading global cybersecurity companies.

BetaShares S&P 500 Equal Weight ETF (ASX: QUS)

Another ASX ETF to consider buying is the BetaShares S&P 500 Equal Weight ETF.

Betashares notes that with interest rates falling, there's a strong chance that stocks outside the tech sector start to rally after underperforming in recent times.

The BetaShares S&P 500 Equal Weight ETF would allow investors to get exposure to this, while also providing plenty of diversification. It said:

The story of the US sharemarket over the last few years has been all about tech. But with the downward trajectory of interest rates likely to boost consumer demand, there is potential for a rotation into value sectors such as financials, utilities and industrials.

By equally weighting each stock in the S&P 500, QUS currently has tech exposure at approximately 13.8% as at 31 December 2024 (compared to 32% for a traditional S&P 500 index tracker), positioning investors to capture opportunities with a broadening market by providing balanced exposure across "value-oriented" sectors including industrials, financials and utilities.

Betashares Crypto Innovators ETF (ASX: CRYP)

A third ASX ETF to consider buying is Betashares Crypto Innovators ETF.

The fund manager believes that this ETF could benefit greatly from Donald Trump's favourable view of cryptocurrencies. It provides investors with access to companies involved in the industry rather than coins. Betashares said:

One of Donald Trump's election promises was to make the US "the crypto capital of the planet", and that pledge drove the price of Bitcoin past a record US$100,000 during the November 2024 election.

Investors looking to benefit from this trend might consider CRYP Crypto Innovators ETF, which provides exposure to companies involved in the digital asset ecosystem, including those engaged in cryptocurrency mining, trading and infrastructure development. This way, investors can access a diversified entry point into the burgeoning digital assets sector through the familiar vehicle of ETFs, without the need to directly invest in cryptocurrencies.

The post 3 ASX ETFs to buy for 2025's hottest investment trends appeared first on The Motley Fool Australia.

They offer a quick and easy way to achieve instant diversification by purchasing a basket of ASX shares or international shares in one go for a single brokerage fee. 

As we reported recently, ASX ETFs invested in international shares are particularly popular with Australian investors this year due to the outperformance of the S&P 500 Index (SP: .INX) vs. the ASX 200.

According to Vanguard and ASX research, international shares ETFs have attracted more than 56% of total cash inflows from investors this year.

So, with the United States election upon us, Betashares Senior Investment Strategist Cameron Gleeson has shared his ideas as to which ASX ETFs may benefit if Donald Trump takes the presidency.

In a new article, Gleeson explores how Trump's policies could impact the global economy and markets, bearing in mind that the impact will also depend on whether the Republicans gain control of Congress.

Let's take a look.

Trump's key policies

Gleeson provides the following overview of the key Trump policies that he thinks matter most.

Taxes and spending

• Cut corporate tax rate from 21% to 15%
• Increase taxes on buybacks and companies' foreign income
• Extend 2017 personal tax cuts for all
• Eliminate US tax on Americans living abroad
• Tax deductions on auto loans
• Repeal green tax incentives in the Inflation Reduction Act (IRA)
• End US aid to Ukraine

Trade and Tariffs

• Impose universal (10%-20%) tariff on all imports
• 60% tariff for all Chinese imports and revoke China's 'Most Favored Nation' status
• Further tariffs on certain auto imports

Immigration, Energy, and the Federal Reserve

• Deport unauthorised immigrants, strengthen border controls and reduce immigration
• Repeal the IRA green subsidies
• Boost oil and gas development, LNG exports and power plant construction
• Potentially allow input from the President on Federal Reserve policy

ASX ETFs that may benefit from a Trump Presidency: expert

BetaShares S&P 500 Equal Weight ETF (ASX: QUS)

Gleeson says the ASX ETF QUS would play on Trump's 'America First' mindset:

Domestically focused US companies have more to gain and less to lose from a possible trade war and protectionism.

This could favour the S&P 500 Equal Weight Index (which QUS seeks to track, before fees and expenses) relative to the market cap weighted S&P 500 Index that is currently dominated by large global tech companies.

Betashares Global Energy Cos-Currency Hedged ETF (ASX: FUEL)

Gleeson says the ASX ETF FUEL may benefit from increased energy production in the US:

Under Trump's plan to ramp up energy production, oil and gas companies could grow revenue even if oil prices go lower, as well as enjoying lower exploration and production costs and lower taxes.

BetaShares Gold Bullion-Currency Hedged ETF (ASX: QAU)

Gleeson says the ASX ETF QAU is an option for investors seeking exposure to the gold price when currencies are volatile:

Conventional wisdom is that Trump's policies will lead to a higher USD, however, he has explicitly stated he will bring the USD down. It is possible that greater currency volatility may result.

Foolish takeaway

Gleeson says investors should be mindful that any potential upside to stocks or ASX ETFs resulting from a Trump victory may be limited to a short post-election bump.

"In the longer term, markets are more beholden to macro-economic fundamentals than politics," he says.

Here at The Motley Fool, our analysts do not advocate trying to time the market. Our team recommends taking a long-term view and using fundamental analysis to choose which ASX ETFs or shares to invest in.

The post 3 ASX ETFs that could boom under a Trump presidency appeared first on The Motley Fool Australia.

Let's check them out.

15 ASX ETFs at 52-week highs today

First up we have the Vanguard MSCI Index International Shares ETF (ASX: VGS). This diversified fund covers more than 20 advanced economies from around the world, including Canada, the United Kingdom, France, Switzerland, Singapore, and Denmark. But most of its holdings are US shares, despite the fact that this fund has almost 1,500 individual companies within it.

VGS units touched $106.05 each this morning, which is this fund's new 52-week high.

Given the dominance of US shares in the Vanguard International Shares ETF, it's no surprise to see other US-based funds doing well today. Another ASX ETF that hit a new 52-week high this morning was the iShares S&P 500 ETF (ASX: IVV). IVV units hit a new high watermark of $44.12.

This S&P 500 ETF holds the largest 500 shares in the US by market capitalisation, so shares many of the same names as VGS, like Apple, Microsoft, NVIDIA, and Alphabet, in its top holdings. The SPDR S&P 500 Trust ETF (ASX: SPY) is virtually identical to IVV in terms of holdings, so it's not a shock to see SPY units hit a new high as well. In this case, our 52-week high comes in at $656.70.

Nor the BetaShares NASDAQ 100 ETF (ASX: NDQ), with its new high of $34.80. This ETF is a little different, tracking the 100 largest shares on the NASDAQ stock exchange. However, it still holds the US tech giants listed above as its top-weighted shares.

Also sharing many of those top holdings is the Vanguard US Total Market Shares Index ETF (ASX: VTS). This fund represents an investment in almost 3,900 US shares but is still dominated by those same names. So again, no one should be taken aback by seeing VTS units at a new 52-week high of $326.70 today.

Our final funds at new highs

It's again a similar story with the Vanguard Ethically Conscious International Shares Index ETF (ASX: VESG). This fund is very similar in nature to the Vanguard MSCI Index International Shares ETF. However, it omits companies like oil shares, tobacco shares, and other 'ethically challenged' companies. But it still holds the US tech giants as its largest investments. VESG units hit a new high of $74.38 this morning.

Similarly, the BetaShares Global Sustainability Leaders ETF (ASX: ETHI) is also having a top day. Again, this ETF holds a basket of the world's largest shares, selected using ethics criteria. The new 52-high for this one sits at $12.72.

Next up is a very similar ASX ETF in the iShares Core MSCI World ex-Australia ESG ETF (ASX: IWLD). This fund is provided by BlackRock and represents a similar investing mandate of choosing the world's largest companies from advanced economies with an ethical bias. IWLD units touched a new 52-week high of $45.60 this session.

Our next ETF to examine today is cut from a different cloth. The VanEck MSCI International Small Companies Quality ETF (ASX: QSML) is a fund that has a portfolio of around 150 different small companies that fulfil certain 'quality' metrics, such as a high return on equity and low leverage. QSML units hit a new 52-week high of $23.53 earlier today.

Onto our final six ETFs at new 52-week highs today are as follows:

• Global X Battery Tech & Lithium ETF (ASX: ACDC) with a new 52-week high of $105.99
• BetaShares S&P 500 Equal Weight ETF (ASX: QUS) at $43.39
• Global X Morningstar Global Technology ETF (ASX: TECH) at $92
• VanEck Morningstar Wide Moat ETF (ASX: MOAT) at $120.18
• BetaShares Global Quality Leaders ETF (ASX: QLTY) at $24.09
• BetaShares Global Shares ETF (ASX: BGBL) at $53.21

The post 15 ASX ETFs smashing new 52-week highs on Wednesday appeared first on The Motley Fool Australia.

The most popular ETFs by far with ASX investors are index funds. Index funds are very simple in nature as they methodically track a major index such as the S&P/ASX 200 Index (SAX: XJO). Indexes like these are usually market capitalisation weighted, meaning that the largest companies in the index account for the largest holdings.

As an example, the largest constituent of the iShares Core S&P/ASX 200 ETF (ASX: IOZ) is currently Commonwealth Bank of Australia (ASX: CBA) with an 8.13% weighting. Since CBA is currently the largest company by market cap on the ASX, it's commensurately the largest holding in the index (and IOZ).

Most index funds work in this way. If a company grows in value over time, its weighting in any index that holds it will also grow. That's why Afterpay Ltd (ASX: APT) has the 14th largest weighting in the index right now, even though it wouldn't have been there at all a few years ago.

Equally, if a company falls on foul fortune and decreases in value, it will progressively be moved down the index to reflect this. Fallen agents like AMP Limited (ASX: AMP) now occupy a far smaller space in the ASX 200 than they did in days of yore.

However, not all indexes follow this weighting methodology. There is a different breed of ETFs out there that have a following, known as "equal-weighted ETFs". As the name implies, an equal-weighted ETF does not allocate larger companies a larger piece of the ETF's weighting. Instead, all companies, regardless of size, are treated equally.

Some are more equal than others…

Take the VanEck Vectors Australian Equal Weight ETF (ASX: MVW). Instead of the method described above, this ETF assigns an equal weighting to each constituent. Thus, CBA is equally weighted to Afterpay, or AMP.

This ETF doesn't track the ASX 200, instead holding 101 companies at the current time. That essentially means that each company gets slightly below a 1% weighting each. Now, these holdings can (and will) move around their initial allocation over time. But this is all part of the process. If say Afterpay has a particularly strong month, and doubles to 2% of the ETF's weighting, it will simply be trimmed at the next quarterly rebalancing of the ETF.

MVW isn't the only equal-weighted WTF on the ASX either.

The iShares S&P 500 ETF (ASX: IVV) tracks the US S&P 500 Index (INDEXSP: .INX) in the conventional, market-cap weighted manner. But the BetaShares S&P 500 Equal Weight ETF (ASX: QUS) instead follows an equal-weighting methodology similar to MVW. Ford Motor Company (NYSE: F) will have the same weighting as Apple Inc (NASDAQ: AAPL) and Tesla Inc (NASDAQ: TSLA).

But is equal weight worth the effort?

How do equal weight ETFs stack up?

There are some arguments that carry logic with this one. One for instance, is the common criticism of the ASX 200 has being dominated by 'banks and miners'. Indeed, the Financials and Materials sectors of the ASX 200 together make up almost 50% of the entire index. In MVW's case, this is instead around 36%.

But what of performance?

Well, MVW has returned an average of 11.49% per annum over the past 5 years. In contrast, IOZ has returned an average of 9.88%.

Maybe the shoe doesn't fit every foot. The iShares S&P 500 ETF has returned an average of 14.03% per annum over the past 5 years. In contrast, the BetaShares S&P 500 Equal Weight ETF has returned an average of 9.74% per annum over the same period.

So clearly equal weight works well in some situations but isn't anything close to a 'silver bullet' of higher returns. Its effectiveness may depend on different market, different companies within those markets, or just pure chance.

Before you make a decision on whether equal weighted ETFs are something you want to pursue, make sure you keep fees in mind. As they are most costly to run (and less popular), equal weight ETFs often have higher fees than their market cap cousins. Take MVW – it charges a management fee of 0.35% per annum. IOZ on the other hand charges 0.1%.

It's a similar story with the US ETFs. IVV charges a fee of 0.04%, whereas QUS asks 0.29%. Those fees can make a difference over time, so keep them in mind.

The post Here's how ASX equal-weight ETFs stack up to index funds appeared first on The Motley Fool Australia.

BetaShares S&P 500 Equal Weight ETF (ASX: QUS) will start trading on Friday 18 December.

There are many ETFs tracking the S&P 500 Index (INDEXSP: .INX) but the distinguishing feature of this fund is that it will invest in equal portions in each of the 500 companies.

In fact, there already is an index that represents the concept – S&P 500 Equal Weight Index (INDEXNYSEGIS: SPXEW).

The need has arisen because this year big tech has hijacked the value of the index. 

The Motley Fool reported last month that FAANGM stocks – Facebook Inc (NASDAQ: FB), Amazon.com Inc (NASDAQ: AMZN), Apple Inc (NASDAQ: AAPL), Netflix Inc (NASDAQ: NFLX), Alphabet Inc (NASDAQ: GOOGL) and Microsoft Corporation (NASDAQ: MSFT) – now make up 25% of the total market capitalisation of the S&P 500.

"We think that the need to diversify broad US exposure is more important than ever," a BetaShares spokesperson told The Motley Fool.

"The equal weight approach reduces the risk of the portfolio being heavily exposed to a small number of 'mega cap' companies, and avoids the susceptibility of market-cap weighting approaches to occasionally become overly concentrated in large stocks that have enjoyed strong price momentum for some time, and so at increasing risk of an eventual performance reversal if their valuations get too extreme."

The ticker code QUS is currently used by BetaShares FTSE RAFI U.S. 1000 ETF (ASX: QUS). But after the close of trade on 17 December, it will start afresh with the new approach.

'Equal weight' has actually outperformed in the long-run

BetaShares is selling the new ETF as a good long-term investment by showing that an equal-weight S&P 500 actually outperformed the standard S&P 500 over the years.

"In the almost 50 years from December 1970 to October 2020, the S&P 500 Equal-weight index returned 12.1% p.a. compared with 10.6% p.a. for the benchmark S&P 500 Index," said the BetaShares spokesperson.

"One reason for this outperformance is that an equal-weight approach provides greater exposure to smaller cap stocks, which on average tend to offer the greatest growth potential."

The change in investment philosophy is also coming with a bonus – a reduction in management fees. The current BetaShares FTSE RAFI US 1000 ETF charges 0.4% per annum while the new fund will slug 0.29%.

This is not the only ETF that BetaShares is resetting. Wednesday 16 December will see the BetaShares Diversified High Growth ETF (ASX: DHHF) change into BetaShares Diversified All Growth ETF (ASX: DHHF).

The "all-growth" label for that new fund has been controversial, with BetaShares admitting many companies that are more than 100 years old are in the portfolio.

The post New 'equal weight' ETF lists on ASX: What it means appeared first on The Motley Fool Australia.