With more than 400 ETFs listed on the ASX, choosing the right investments can be challenging. Experienced investors understand that return volatility is just as important as expected returns when assessing a fund or stock. While risk is often associated with higher return potential, the relationship is not always straightforward. In practice, selecting a higher-risk investment does not automatically translate into higher expected returns.
Figure 1 below shows the ASX-listed ETFs plotted by their expected return and volatility. Indicators calculated as of 1 February 2026.
As shown in Figure 1, the vast majority of ETFs fall into a relatively unremarkable cluster, characterised by expected returns below 20% and return volatility below 20%. Even within this group, however, performance varies significantly: expected returns range from close to 0% (with volatility near 20%, in the bottom-left corner of the green dashed rectangle) to almost 20% with similar volatility in the top-right quadrant of the same area.
Beyond this cluster, several ETFs exhibit both expected returns and volatility in the 20%ā30% range. There is also a distinct group of around 10 ETFs where expected returns are materially higher than volatility (highlighted in the orange dashed rectangle). This group suggests comparatively stronger and more stable expected performance. As shown in Table 1 below, these ETFs are primarily concentrated in gold, mining, and defence sectors.
From Figure 1, a natural question arises:
- Why would an investor choose an ETF with a weaker risk-return profile (for example, CRYP), where they are exposed to significantly higher risk than with GDX, ARMR, or GFND, yet with lower expected returns?
- Why would an investor allocate capital to ETFs with both high volatility and negative expected returns (such as QETH or QBTC)?
There is a common perception that higher risk necessarily leads to higher returns, but this is far from guaranteed. Investors are therefore well advised to regularly assess their riskāreturn positioning and to select securities that are aligned with the objectives and constraints of their overall portfolio.
Top 10 ASX-listed ETFs by Expected Return
| ASX Code | Name | Expected return* | Volatility of returns |
| DFND | VanEck Global Defence ETF | 69.41% | 24.19% |
| GDX | Vaneck Gold Miners ETF | 52.76% | 30.06% |
| ARMR | Betashares Global Defence ETF | 52.68% | 21.69% |
| MNRS | Betashares Global Gold Miners ETF – Currency Hedged | 50.71% | 30.40% |
| GLDN | Ishares Physical Gold ETF | 49.57% | 16.49% |
| SEMI | Global X Semiconductor ETF | 44.47% | 30.19% |
| NUGG | Vaneck Gold Bullion ETF | 41.07% | 15.93% |
| FANG | Global X Fang+ ETF | 37.93% | 24.71% |
| QAU | Betashares Gold Bullion ETF – Currency Hedged | 37.87% | 16.33% |
| WIRE | Global X Copper Miners ETF | 33.31% | 28.92% |
* Expected return calculated based on historical data, as geometric average of daily returns during the past 3 years, annualised. Volatility calculated as the standard deviation of daily returns, annualised. Past performance does not guarantee future performance, but it can provide an indication of what investors may expect, especially in terms of size of fluctuations and risk of loss.
Note: This is not personal investment advice and does not constitute a recommendation to invest in any of the securities mentioned above. Please do your own research and/or speak with your financial advisor. The purpose of this discussion is to illustrate expected performance and associated risk, and to encourage readers to look beyond the hype often surrounding popular ETFs.
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