ASX ETFs (Exchange Traded Funds): Here’s why they’re a good option for investors to consider, and here are our Top 4 for 2026!

There are a variety of options available for investors looking to invest in the stock market, with ASX ETFs (Exchange-Traded Funds) being one of the most popular.

According to BetaShares, the ETF industry was worth $330.6bn in early 2026 – a figure that was not even over $200bn just 2 years prior. It is growing at a CAGR of over 40!

$196bn of value was traded on the ASX in 2025, and there were $53bn in industry flows. 71 new products were launched, taking the total to 453 across the ASX and CBOE, and the vast majority were passive rather than active. There are 65 issuers (i.e. companies offering and operating ETFs) but the top 3 took over 70% of industry flows.

The most popular category (in new inflows) was international equities, followed by Australian equities and then fixed income ETFs. Despite the popularity in gold, the performance of some individual ETFs (some more than doubled) and even though gold ETFs had their best year on record with $1.8bn flown in…this wasn’t even a tenth of the $20.9bn international equities received.

But enough of all those statistics because some of you may be wondering what exactly is an ETF and why should you consider investing in one? We hope you can now see you ought to know.

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What is an ETF?

An ETF is a type of investment fund that holds a basket of assets such as stocks, bonds, or commodities. It can be bought and sold on an exchange, similar to a stock, making it a more accessible option for investors compared to traditional mutual funds.

In other words, it is like having your money invested by professional fund managers, but instead of handing all the money to them and leaving it at the mercy of the fundies, you just buy and sell shares in the ETF and have exposure to a broad portfolio of stocks.

ETFs can be exposed to a variety of assets or thematics – from regular currencies to cryptocurrencies, from commodities to forex fluctuations, from Australian indices to foreign indices, from healthcare to technology…there are even so-called ‘anti-woke ETFs‘. With over a hundred options on the ASX so far as this asset class, there’s something for just about all investors.

This being said, it does not mean that investors should necessarily invest in them, at least not without due diligence. Remember when the Obama administration lifted restrictions on Cuba last decade and an ETF with that code rose roughly 50% in a day even though it had very little to do with Cuba specifically?

The rise of trading apps and Millennial/Gen Z investors has made it easier than ever for people to gain exposure to broader investment trends than at any point in the history of investing. Notwithstanding that the above is an extreme example, we don’t think it is totally irrelevant to point out in order to highlight that investors should do further due diligence rather than just looking at a fund’s name and/or code.

Advantages of ETFs

Several advantages of investing in ETFs exist. One of these is their low cost, they typically have lower management fees compared to actively managed funds, making them a more affordable option for investors. Additionally, since these funds are traded on exchanges, there are no sales loads or commissions involved, further reducing the costs for investors.

Another advantage (as we’ve briefly touched on) is their diversification. By investing in an ETF, you are essentially buying a basket of stocks, which helps spread out your risk. This means that if one stock within the fund performs poorly, it may be offset by the performance of other stocks in the fund.

ETFs also provide investors with flexibility. Unlike mutual funds, which can only be bought or sold at the end of the day, these funds can be traded throughout the day just like stocks. This allows investors to make quick buying or selling decisions in response to market changes.

Disadvantages of ETFs

However, there are also disadvantages to investing in ETFs. One major disadvantage is that you have less control over the assets held in the fund. Unlike individual stocks, where you can choose which companies to invest in, ETFs have a predetermined portfolio determined by the fund manager. And you may not know all of the stocks it holds. Most will disclose the top 10 or so, but you’ll need a professional financial data source (like a Bloomberg Terminal) to see the full list.

ETFs may also be subject to volatility and market fluctuations. Since they are traded on exchanges like stocks, their prices can fluctuate throughout the day based on market demand. This means that investors may experience more short-term volatility compared to traditional mutual funds.

Another potential disadvantage of ETFs is the lack of personalised advice. Unlike actively managed funds, where a fund manager makes investment decisions on behalf of investors, ETFs are passively managed and do not offer personalized advice or guidance.

And finally, unlike regular stocks, management fees will eat into returns you might get from the fund. Given it is a fixed fee of FUM and is rarely over 1.5% or so, it may not even be noticed if the ETF makes a return. However, the fee is liable to be paid (indirectly) regardless of performance.

The 4 best ASX ETFs

1. Vanguard Australian Shares Index ETF (ASX:VAS)

Vanguard Australian Shares Index ETF (ASX: VAS) is one of the most widely held Australian equity ETFs. It tracks the FTSE Australia 200 Index, providing exposure to the largest 200 companies listed on the ASX by market capitalisation across all major sectors.

This is not the only ETF tracking the ASX 200, but investors favour VAS because of its low management fee relative to active Australian equity funds, its broad diversification that closely mirrors the performance of the Australian share market, and its transparent passive strategy.

VAS is also very liquid, with tight bid-ask spreads that benefit cost-conscious investors. For investors focused on long-term capital growth with dividend income, it offers steady exposure to Australia’s banks, miners and other large sectors.

Because it does not attempt to time markets and simply replicates the index, it tends to perform in line with broader economic cycles, capturing both upswings and downturns in the domestic economy.

2. Vanguard MSCI Index International Shares ETF (ASX: VGS)

Vanguard MSCI Index International Shares ETF (ASX: VGS) gives Australians diversified exposure to global developed markets equities (excluding Australia). It tracks the MSCI World ex-Australia Index, covering large and mid-cap stocks across North America, Europe and Asia.

This ETF is attractive to investors seeking a long-term growth engine outside of Australia’s domestically concentrated market. VGS offers exposure to multinational tech leaders, consumer staples, healthcare innovators and industrial giants that shape global economic trends. Because it is hedged to Australian dollars or available in unhedged variants, investors can manage currency risk according to their views on AUD movements.

Historically, global equities have delivered higher compounded returns over long horizons compared with many domestic markets, though with notable volatility during crises. VGS allows investors to buy this return stream efficiently and cost-effectively, benefiting from Vanguard’s low fee structure.

For buy-and-hold portfolios, it helps reduce concentration risk and aligns with modern portfolio diversification principles. It functions as a growth anchor when paired with domestic equity and fixed income exposures.

3. BetaShares Crypto Innovators ETF (ASX:CRYP)

BetaShares Crypto Innovators ETF provides exposure to companies involved in the broader cryptocurrency ecosystem rather than the digital assets themselves. Instead of holding Bitcoin or Ethereum directly, CRYP invests in equities such as crypto exchanges, miners, infrastructure providers and companies with substantial bitcoin or blockchain exposure — for example, platforms like Coinbase, crypto mining firms and technology firms bridging traditional finance with digital assets.

This structure aims to capture the “picks and shovels” side of the crypto boom, meaning if crypto adoption grows, these businesses can benefit without the investor needing to navigate crypto wallets and private keys.

Performance is uneven over the long term — attractive during risk-on cycles but vulnerable in downturns — and the fund does not pay a distribution yield since its focus is growth and sector exposure rather than income. It delivered exceptionally strong returns during parts of 2023 and 2024 when crypto markets rallied, but it is also subject to large swings because the underlying equities are tied to highly cyclical and speculative markets.

Because its holdings are global and technology-centric, currency movements and US equity performance materially influence CRYP’s returns. Overall, this ETF is best suited to investors with high risk tolerance and a long-term view on digital economy innovation rather than short-term crypto price tracking.

4. BetaShares Global Robotics and Artificial Intelligence ETF (ASX:RBTZ)

The BetaShares Global Robotics and Artificial Intelligence ETF targets companies involved in robotics, automation, artificial intelligence and related technologies across global industries. Its index methodology includes firms developing industrial robots, AI software systems, unmanned systems, automation hardware and technologies that drive the digital transformation of manufacturing, logistics, healthcare and other sectors.

Because automation and AI adoption are structural, long-duration trends rather than short-term fads, RBTZ tends to hold up better than narrowly cyclical tech funds during periods of moderate market volatility. Companies in its portfolio — which can include semiconductor firms, robotics hardware producers and advanced systems integrators — benefit from continued investment in efficiency and digital infrastructure worldwide.

While not exclusively focused on decarbonisation, many robotics and automation technologies contribute to energy efficiency by reducing waste and improving operational precision, which aligns with broader decarbonisation goals. Unlike narrow cryptocurrency plays, RBTZ offers diversified global exposure across mature and emerging markets with a thematic anchor in transformative technology.

Performance over multi-year periods has been positive when measured against broader markets focused on traditional sectors, reflecting steady demand for automation and AI solutions even in varying economic conditions. Investors should expect medium-to-long-term growth potential with technology-related volatility and consider RBTZ as a core thematic allocation to innovation rather than a short-term trade.

Conclusion

As you can see, ETFs are a viable investment option for investors to consider. However, there are disadvantages as well as advantages, and so it is important for investors to carefully consider their investment goals and risk tolerance before deciding to invest in ETFs or other types of funds. The decision to invest in ETFs should align with an individual’s overall investment strategy and portfolio diversification goals.