Our Pick Of The Best ETFs For Australians In 2024 (2024)

The ‘best’ ETFs to invest in will depend on the individual objectives of the investor, as not only are investments inherently volatile, but the best choice for an investor varies from person to person. In order to fairly analyse and determine the above list, we used a detailed methodology.

Firstly, more than 20 high-performing ETFs in Australia were compared against 15 key factors. These were:

• What sector, commodity, currency or index the ETF tracks;
• Who issues the ETF;
• The year the ETF was formed as older ETFs were likely to be better established;
• The objective of the ETF;
• If it tracks a sector or an index, what the sector allocation is;
• What the portfolio consists of;
• Whether it is actively managed or passively tracked;
• The total size of the funds under management;
• What the total net asset value is;
• How frequently the dividends are paid, if it’s a dividend ETF;
• The management fees associated with investing in the fund;
• The one-year return rate of the fund after fees;
• The fund’s five-year return rate (a more reliable metric);

All of these metrics were compared and contrasted, with each ETF then receiving a ranking out of five depending on how the metrics stacked up. From there, the nine highest scoring ETFs made it onto the list for our favourite ETFs for Australians in 2024. It’s worth noting that this list is not exhaustive as not every ETF was analysed, but is rather intended to act as a sample menu of some of the high-quality ETFs available to investors.

About Star Rankings
You will note that we have included a star rating next to each product or provider. This rating was determined by the editorial team once all of the data points above were considered, and the pros and cons of each product attribute was reviewed. The star rating is solely the view of Forbes Advisor editorial staff. Commercial partners or advertisers have no bearing on the star rating or their inclusion on this list. Star ratings are only one factor to be considered, and Forbes Advisor encourages you to seek independent advice from an authorised financial adviser in relation to your own financial circ*mstances and investments before you decide to choose a particular financial product or service.

Australians can invest in ETFs in a few simple steps, as outlined below. For more information, read our How To Buy ETFs In Australia guide.

Firstly, you will need to open a brokerage account if you do not have one already. This can either be through a brokerage firm, or you can find an online broking service or share trading platform–which is the most common option in our digital world.

Not all online brokerage services have the option to trade ETFs, so check for this feature before you sign-up. If you already have a brokerage account with a broker that doesn’t offer ETF trading, you will have to open up a new brokerage account with one that does.

Once you have the means to invest in ETFs, you’ll need to decide on your investment strategy; this includes how much you want to invest, how you will allocate your investment, and what type of ETF you are after. Once you’ve made these decisions and researched the ETFs available that fit your strategy and risk-profile, you can make the purchase.

Keep in mind that your ETF investment journey doesn’t end once you’ve made your purchase. Eventually, you’ll want to sell your investment in the hopes of making a profit, so you should consider what your exit plan is at the time of purchase. As with any investment, it pays to play the long game.

Exchange-traded funds vary depending on the type of index they track, the sector they are focused on, or the level of risk they carry.

Despite their differences, there are common features to help you decide what fits your investment needs.

Markets and sectors

As explained earlier, exchange-traded funds can track any number of markets, sectors or commodities, which is why it’s important to consider what the fund is tracking.

If you’re a green investor, or someone interested in sustainability, you likely wouldn’t want to invest in a fund that tracks an index heavy in industries related to fossil fuels. Another example is gambling or tobacco: if you are not interested in investing in these types of companies, then you would also not want to choose a fund that tracks a related market or sector.

Dividends and Income

Dividends from part of distributions, or income, that you may receive from your ETF. Distributions are income payments that, depending on the asset class you are invested in can include dividends, rent and interest. It’s always worth knowing what you will and will not be receiving from the investment–and how regularly these distributions (if any) are paid out.

Equity (or stock) ETFs are very popular with investors, and stocks will pay out dividends. Commonly, dividends are distributed annually, but they can also be paid out on a semi-annual or quarterly basis. It’s also important to understand the dividend yield of the ETF, which is the percentage of the purchase price paid in dividends during the prior 12 months.

Active or Passive ETFs?

An ETF can either be passive or active: passive ETFs are those that passively track an index and usually aim to match its performance, while actively-managed ETFs aim to outperform it.

Management Fees

Active ETFs usually have higher management fees. But, even if it’s a fund passively tracking an index, you will still encounter management costs. It’s important to note that these differ from brokerage fees, which is the cost you are charged by your broker when purchasing the ETF.

Management fees are expressed as a per annum fee, but it is subtracted from the actual investment. This means that you won’t see a separate fee for management fees.

History: Performance, Investor Trust and Longevity

While past performance is not an indicator of future performance, it’s still a helpful guardrail when choosing which ETF to invest in. It’s also important to consider when the fund was established—as the longer the fund has been in existence, the more reliable track record it has to demonstrate performance over time. Newer funds shouldn’t be disregarded by investors because of this fact; it should simply be a consideration.

That’s especially true when it comes to looking at the history of returns. A fund that has been around for quite some time will be able to showcase its five- or even ten-year return history, while a fund still in its infancy may only be able to provide its return history for the past 12 months.

This is a key reason that when comparing a range of ETFs to collate the above list, Forbes Advisor looked at both one-year and five-year returns.

The advice and information provided by ForbesAdvisor is general in nature and is not intended to replace independent financial advice. ForbesAdvisor encourages readers to seek expert advice in relation to their own financial decisions and investments.

Data research: Mia Dunn