10 ASX ETFs to Watch in March 2023

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 ten could be very interesting as of the month of March 2023.

1. VanEck Vectors Morningstar Wide Moat ETF (MOAT)
2. Vanguard Australian Shares High Yield ETF (VHY)
3. Global X ETFs Physical Gold (GOLD)
4. BetaShares Crude Oil Index ETF - Currency Hedged (OOO)
5. Vanguard FTSE Asia ex Japan Shares Index ETF (VAE)
6. BetaShares Strong Australian Dollar Fund (AUDS)
7. BetaShares Australian Equities Strong Bear Hedge Fund (BBOZ)
8. Global X ROBO Global Robotics & Automation ETF (ROBO)
9. Global X Battery Tech & Lithium ETF (ACDC)
10. SPDR S&P World ex-Australia Carbon Control Fund (WXOZ)

1. VanEck Vectors Morningstar Wide Moat ETF (MOAT)

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 hard 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 penumbra, 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.

The fund has the potential to post a strong performance in 2023, amidst ongoing hawkish monetary conditions in advanced economies that have led to uncertainty for the US banking sector.

4. BetaShares Crude Oil Index ETF – Currency Hedged (OOO)

BetaShares Crude Oil ETF 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.

Over the past year, oil prices rose over 50% and fell back again, and are now close to where they were a year ago.

Over the near term, however, there could be a significant impact on the demand/supply balance. If a sudden fall in supply does push up crude oil prices, then a bet on OOO rising could make a decent return.

5. Vanguard FTSE Asia ex Japan Shares Index ETF (VAE)

FTSE Asia ex Japan ETF aims to track the return of the FTSE Asia Pacific ex Japan, Australia and New Zealand Index before fees and expenses.

Over the past 18 months since May 2021, VAE has fallen steadily. Part of the general malaise in Aisa has been related to the ongoing lockdowns and related supply chain issues in China.

The Chinese government has since lifted restrictions almost completely in response to nationwide protests, however, buoying Asian markets and giving VAE momentum to rise in 2023.

6. BetaShares Strong Australian Dollar Fund (AUDS)

The Strong Australian Dollar Fund 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.

Over the two months to 31 December 2022, the Australian dollar gained (4.6%) against the USD, AUDS leveraged this gain into a 9.9% rise over the same period.

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)

The Strong Bear Hedge Fund aims to provide geared negative exposure to the Australian sharemarket at a rate of between 2% and 2.75% for each 1% change in the value of the share market.

Over time sharemarkets generally appreciate, 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.

According to a survey conducted by management consulting firm AT Kearney,

79 percent of executives who have manufacturing operations in China have either already moved part of their operations to the United States or plan to do so in the next three years, and another 15 percent are evaluating similar moves.

For manufacturing to be competitive in the US, companies are going to have to spend billions on robotics and automation.

9. Global X Battery Tech & Lithium ETF (ACDC)

The Battery Tech & Lithium ETF 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 caused by lithium prices.

Demand from electric vehicles also continues to rise: the World Economic Forum forecasts 2022 sales of electric vehicles and plug-in hybrid electric vehicles to hit 10.6 million – a 57% jump over 2021.

Continued demand for batteries, battery technology and lithium could boost the price of ACDC.

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, shares:AMZN-US|Amazon] and Alphabet (Google).

WXOZ makes the list because it has diversified holdings of the largest companies least affected by high energy prices.

Apple alone made a USD94.7 billion profit in 2021, almost doubling its USD57.4 billion in 2020. Microsoft, Amazon and Google all increased their profits during the pandemic.

How to trade or invest in Australian ETFs

Gain exposure to a number of assets in a single trade with Australian ETFs from just $5 commission if you trade more than three trades in the previous month and $0 commission on US ETFs* on a share trading account. Find out more about ETF trading or open an account to trade now.

* Note for multi-currency accounts: These figures apply to clients who opt for the default setting of 'instant currency conversion'. Clients who choose to convert currencies manually will pay commission of 2 cents per share with a minimum charge of $10 on US stocks and, for European markets, we charge £10 / €10 per trade or 0.1%, whichever is higher. Other fees and charges may apply, please refer to https://www.ig.com/au/share-trading/charges.