10 ASX ETFs to watch in September 2023
Exchange Traded Funds offer investors the opportunity to stay ahead of global events and profit from their impacts by investing in sectors and regions, rather than through individual shares
Exchange Traded Funds (ETFs) are an increasingly popular way for investors to gain exposure to a wide variety of investments at a relatively low cost.
ETFs generally hold a particular type of shares, bonds, commodities, currencies, cryptocurrencies or futures contracts and usually reflect the price movement of their holdings. This enables investors to get exposure to particular industries (such as a financial services ETF), an index (such as the ASX200 ETF), international markets (such as a Korean shares ETF), bonds (through a bond ETF), etc.
There are approximately 258 ETFs trading on the ASX through financial services providers such as BetaShares, BlackRock, ETFS Management (AUS) Limited, State Street Global Advisors, Australia Services Limited, VanEck Investments Limited and Vanguard Investments Australia Ltd.
The following list of 10 ETFs could be very interesting as of the month of September 2023.
1. VanEck Vectors Morningstar Wide Moat ETF (ASX: MOAT)
2.. Vanguard Australian Shares High Yield ETF (ASX: VHY)
3. Global X ETFs Physical Gold (ASX: GOLD)
4. BetaShares Crude Oil Index ETF - Currency Hedged (ASX: OOO)
5. Vanguard FTSE Asia ex Japan Shares Index ETF (ASX: VAE)
6. BetaShares Strong Australian Dollar Fund (ASX: AUDS)
7. BetaShares Australian Equities Strong Bear Hedge Fund (ASX: BBOZ)
8. Global X ROBO Global Robotics & Automation ETF (ASX: ROBO)
9. Global X Battery Tech & Lithium ETF (ASX: ACDC)
10. SPDR S&P World ex-Australia Carbon Control Fund (ASX: WXOZ)
1. VanEck Vectors Morningstar Wide Moat ETF (ASX: MOA)
This popular ETF follows the Warren Buffet playbook when it comes to investment strategy, focusing in particular on US companies that possess a 'moat' in the form of competitive advantages that are difficult for their peers to overcome.
Emulating the Buffet strategy has made the ETF a strong long-term performer, with an average annual return of 19.2% over the past decade.
The fund usually has around 50 shares under its aegis, including corporate stalwarts such as Adobe, Amazon, Boeing, Microsoft and Disney.
Changes to its portfolio composition are usually in the form of removal of shares from its lineup due to overvaluations.
2. Vanguard Australian Shares High Yield ETF (VHY)
The goal of this ETF is to acquire stakes in ASX-listed companies with higher projected dividends, to produce stronger yields for investors.
While investments that offer strong returns invariably come with higher levels of risk, the Vanguard Australian Shares High Yield ETF seeks to mitigate this risk via heightened diversification.
It currently holds around 70 shares in its portfolio, restricting investment in any single company to 10% and investment in any particular sector to 40%.
These shares thus cover a gamut of sectors, including giants such as BHP Group Ltd, Commonwealth Bank of Australia and Wesfarmers Ltd.
3. Global X ETFs Physical Gold (GOLD)
This ETF ties itself to the performance of gold via investment in physical bullion which investors can acquire directly by redeeming their units in the fund.
It is the first physical gold ETF to launch in Australia, with $2.6 billion in assets under management as of January 2023.
As of 31 December 2022 one unit in the fund represented 0.00898 fine troy ounces of physical gold, while the management fee stood at 0.40% per annum.
Leading analysts have recently become bullish about gold prices, as signs emerge that the Federal Reserve is about to reach the end of its hiking cycle. JP Morgan expects gold prices to hit a record high of around $2,175 per counce in the final quarter of 2024.
4. BetaShares Crude Oil Index ETF – Currency Hedged (OOO)
OOO tracks the rise and fall in the price of crude oil against the US dollar and is hedged against currency movements so that a change in the value of the Australian dollar will have a limited impact on the price.
OOO is the best-performing ASX ETF of the past three years thanks to a spike in oil prices, with a three-year return of over 30%.
5. Vanguard FTSE Asia ex Japan Shares Index ETF (VAE)
VAE aims to track the return of the FTSE Asia Pacific ex Japan, Australia and New Zealand Index before fees and expenses.
While Asia-Pacific economies are in general still struggling to recover from the Covid pandemic, Chinese tech stocks have recently received a boost from Huawei's release of the Mate60 smartphone, indicating that China may have developed its own indigenous chipmaking capabilities that will thwart US export checks.
6. BetaShares Strong Australian Dollar Fund (AUDS)
AUDS aims to provide geared exposure to the Australian dollar against the US dollar at a rate of between 2% and 2.75% for each 1% rise in the Australian dollar.
The annulment of Covid restriction in China and a return to economic activity could spur demand for resources, which in turn could raise the value of the Australian dollar.
7. BetaShares Australian Equities Strong Bear Hedge Fund (BBOZ)
BBOZ aims to provide geared negative exposure to the Australian share market at a rate of between 2% and 2.75% for each 1% change in the value of the share market.
Over time sharemarkets generally appeciate, so BBOZ doesn't make sense as a long-term investment. However, as a trading tool, BBOZ can be useful for locking in short-term gains or protecting against short-term losses.
This is particularly useful during short periods of uncertainty, such as when the government implements price controls on energy that could have a negative impact on the stock market.
8. Global X ROBO Global Robotics & Automation ETF (ROBO)
ROBO holds shares in companies that potentially stand to benefit from increased adoption and utilisation of robotics and artificial intelligence.
The pandemic and subsequent health response demonstrated the importance of having onshore production of critical products.
ROBO could see a strong performance in future if the latest breakthroughs in generative artificial intelligence (AI) and automation turn out to have a transformative impact on economic productivity.
9. Global X Battery Tech & Lithium ETF (ACDC)
ACDC invests in companies throughout the lithium cycle from mining and refining to battery production.
This gives exposure to the industry rather than just to mining, which removes some of the volatility created by movements in lithium prices.
ACDC could receive a boost from the increasing uptake of electric vehicles around the world, in response to concerns over climate change. The International Energy Agency (IEA) forecasts a 35% year-on-year rise in electric vehicle purchases in 2023, with sales expected to top 14 million by the end of the year.
ACDC has already proved a strong performer in recent years, with a 1-year return of 30.14% and a 3-year return of 26.87%.
10. SPDR S&P World ex-Australia Carbon Control Fund (WXOZ)
WXOZ seeks to closely track the S&P Developed Ex-Australia Large midCap Carbon Control Index. Put simply, WXOZ holds shares in companies mainly in the US that have the lowest carbon emissions per unit of revenue.
The top holdings are Apple, Microsoft, Amazon and Alphabet (Google).
WXOZ makes the list because it has diversified holdings of the largest companies least affected by high energy prices. Given the ongoing conflict in Ukraine, volatility in energy prices should remain on the radar of savvy investors.
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