Investors in the Australian Securities Exchange (ASX) face a complex landscape of approximately 390 exchange-traded funds (ETFs). While these funds span broad index tracking to niche thematic categories, not all achieve sustained success. The operational costs associated with running an ASX ETF, including index licensing fees, trading costs, and compliance expenses, can lead to fund closures if they fail to attract sufficient investor interest.
Ongoing fees are a significant concern for ETF issuers, as these costs remain fixed regardless of the fund’s investment level. If an ETF does not generate enough trading activity or investment, the revenue from management fees may fall short of covering operational expenses, ultimately resulting in the fund’s shutdown.
Challenges in the ETF Market
A recent report from Vanguard highlights the difficulties faced by many funds over the past 15 years. Investors have navigated through numerous market challenges, including the COVID-19 pandemic, inflation spikes in 2022, geopolitical conflicts, and the fallout from Brexit. During this period, Australian investors had access to over 1,000 multi-asset funds, yet more than half have either closed or ceased reporting performance data.
As of September 30, 2025, approximately 200 funds maintained a track record of at least 15 years. This statistic underscores the reality that achieving long-term success in the ETF market is a considerable challenge.
Successful ASX ETFs
Despite the hurdles, a few ASX ETFs have demonstrated remarkable resilience. The iShares S&P 500 ETF (ASX: IVV), which invests in the performance of the S&P 500 Index, has shown significant growth since its listing in 2008. This ETF, which includes major tech companies such as Microsoft Corp (NASDAQ: MSFT), Apple Inc. (NASDAQ: AAPL), and Nvidia Corp (NASDAQ: NVDA), has increased by an impressive 650% over its lifespan. Over the past decade, it has delivered average annual returns of approximately 15%.
Another notable performer is the Vanguard Australian Shares Index ETF (ASX: VAS), which tracks the S&P/ASX 300 index, representing Australia’s largest 300 companies. It is currently the largest ASX ETF by market capitalization, boasting a valuation exceeding $22 billion as of October 2025. Since its launch in 2009, VAS has historically offered returns around 9% per annum.
Investors should remember that past performance does not guarantee future returns. However, the success of these ETFs illustrates that certain funds can withstand market volatility and emerge as reliable investment options.
As individuals consider their investment choices, it is essential to evaluate the ongoing performance of these funds and the broader market context. While the iShares S&P 500 ETF has shown strong results, investment experts like Scott Phillips caution that there may be other stocks worth considering at this time.
In conclusion, while the ASX ETF landscape is marked by numerous challenges, a select few have managed to thrive amidst market fluctuations. Investors should conduct thorough research and consider various factors before making investment decisions.
