Value-focused ETFs lead the way for annual performance

Funds focused on value-orientated sectors have been among the best-performing exchange traded funds (ETFs) over the past year, according to SQM Research.

The ratings house released data on the top ETFs over one year to 31 May and value themes were ranked highly.

Within the top 10 best performers, this included BetaShares Crude Oil Index ETF, VanEck Vectors Australian Banks ETF, BetaShares Global Banks ETF and BetaShares Global Agriculture Companies.

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These had returned 74%, 58%, 52% and 50% respectively compared to returns of 26% by the ASX 200, according to FE Analytics.

Performance of ETFs versus ASX 200 over one year to 31 May 2021

Financials and commodities had all been highlighted as sectors which were performing well in a value environment with value currently outpacing growth for the first time in a decade.

Lewis Grant, senior global equities portfolio manager at the international business of Federated Hermes, said: “Rising inflationary expectations are most beneficial for cyclical areas, such as materials, financials and industrials. However, with much of the initial euphoria of the reopening behind us, it is important to be selective.

“Energy and some materials names face sustainability challenges, while a robust demand for copper is assured as we transition to a green economy. We believe that areas of the mining sector are better positioned than oil producers to benefit from the next commodity cycle that just started.”

Dougal Maple-Brown, head of Australian equities at Maple-Brown Abbott, said: “In our view, sectors that will benefit include the financials (we are overweight both banks and the general insurers) and commodities (particularly the energy sector which has underperformed the underlying commodities)”.

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