Key takeaways

  • OOO tracks a focused crude oil futures index, offering direct access to opportunities in the crude oil futures market
  • VAS aims to achieve potential long-term capital growth while also providing dividend income and franking credits, enhancing overall returns
  • OOO outperformed its benchmark with a 25.45% return over the past year, highlighting its strategic alignment with crude oil markets
  • VAS delivered an 11.91% return over the past year, affirming its ability to track the S&P/ASX 300 Index effectively to achieve desired objectives

Investing in Exchange-Traded Funds (ETFs) offers a flexible and accessible approach to diversifying investment portfolio, with advantages such as better liquidity, transparency, and lower fees compared to mutual funds. This makes ETFs appealing to both new and seasoned investors aiming to achieve specific financial goals. ETFs provide flexibility and potential long-term growth opportunities across broad market exposure, niche sectors, or thematic investments.

This article explores two ETF categories with returns exceeding 10% in the past year.

Crude Oil Index ETF – Currency Hedged (Synthetic) (OOO)

Investors interested in crude oil futures can leverage OOO, which aligns strategically with a focused index. This ETF offers a straightforward avenue to tap into the potential of crude oil futures. OOO is specifically designed to mirror index performance while mitigating risks associated with AUD/USD exchange rate fluctuations.

Data source: Betashares website; Image Source: © 2024 Krish Capital Pty.Ltd

As of 28 June 2024, OOO allocated 100% of its portfolio to the crude oil sector. Over the past three months, OOO achieved a return of 0.63%, outperforming its benchmark index, which saw a -0.08% return. Over one year, OOO delivered a substantial return of 25.45%, surpassing its benchmark index’s performance.

Data source: Betashares website; Image Source: © 2024 Krish Capital Pty.Ltd

Vanguard Australian Shares Index ETF (VAS)

The Vanguard Australian Shares Index ETF is an ideal choice for investors seeking cost-effective exposure to a diverse range of Australian equities and property trusts listed on the ASX. It aims to replicate the performance of the S&P/ASX 300 Index. This ETF not only targets potential long-term capital growth but also offers investors dividend income and franking credits, enhancing overall returns.

Data source: Vanguard website; Image Source: © 2024 Krish Capital Pty.Ltd

As of 31 May 2024, prominent holdings include BHP Group, Commonwealth Bank of Australia, and CSL Ltd. Over the past year, the fund achieved a return of 11.91%, and over three years, it delivered a return of 6.08%, as of 30 June 2024.

Data source: Vanguard website; Image Source: © 2024 Krish Capital Pty.Ltd

OOO's strategic alignment with crude oil futures offers a straightforward vehicle to capitalise on commodity trends, with recent returns reflecting its robust performance amidst market fluctuations. On the other hand, VAS provides exposure to a broad spectrum of Australian equities, bolstered by consistent returns and the added benefit of dividend income. Whether targeting specific sectors like energy or seeking diversified exposure within a local market, ETFs like OOO and VAS continue to serve as valuable tools for achieving desired returns. However, past performance is not a reliable indicator of future performance and thorough research is essential before choosing any fund.