Good grades and room for extra credit

While the outlook for the remainder of the year is about as ‘clear as mud’, the past six months’ worth of performance presents some compelling – and potentially surprising – trends for investors to consider. As always, past performance is not a reliable indicator of future results, but we think there are strong arguments for several asset classes, sectors and thematics to continue their momentum through the second half of 2025.

Table 1: VanEck top 10 ETF performers for 1H25  

Source: Morningstar, 1 January 2025 to 30 June 2025. ETF results are net of management fees and other costs incurred in the fund but do not include brokerage costs and buy/sell spreads incurred when investing in the ETFs on ASX. For full details of past performance download the fact sheets provided. Importantly, this is a short time period, past performance is not a reliable indicator of future performance.

Global defence

Global defence ETFs have benefited from a once-in-a-generation defence spending spree worldwide. Companies such as Leonardo Spa, Hensoldt AG, and Babcock International, have seen triple-digit price growth in the first half of 2025 of 100.5%, 213.13% and 138.23% respectively (source: Bloomberg). Among other ongoing geopolitical tensions throughout the world that serve as a tailwind for global defence, NATO’s increase of the defence spending commitment to 5% of the GDP (up from 2%) will continue to drive growth in this segment over the next decade.

Gold miners

In 2024 and 2023 the returns of gold miners did not match the rise of the gold price, lagging the performance of the yellow metal. This is unusual because typically in the past, the price of gold miners rose more than the increase in the gold price, as their margins normally expand with the increase. Due to this disconnect, gold miners have been trading well below historical averages. While gold miners have returned to form in 2025, we think there may still be plenty of runway for gold stocks as they reclaim their role as a leveraged play on gold. Our expectations of a sector re-rating are supported by continued strength in the gold price and are anchored to generally solid company fundamentals.

Video gaming and esports

While the Magnificent 7 has long ruled the roost as the most prominent high-growth tech stocks, it could be time for these megacaps to pass the baton. The AI revolution has been a fresh growth driver for video gaming & esports companies, facilitating technological breakthroughs across the gaming value chain that has translated into faster revenue growth and steadily increasing operating margins. The sector’s 12-month earnings-per-share growth of 6% is far stronger than that of the S&P 500 (-6.4%), Nasdaq (-5.8%) and the Mag 7 (0.6%). 

Gold bullion

While short-term volatility is possible, we believe gold has formed a higher base (around the US$3,000 to US$3,100 per ounce level), suggesting upside potential remains. Structural central bank buying continues to act as a durable floor under prices. During the equity rallies in May and June, gold held steady, even with a surge in risk assets, indicating a broadening investor base and underlying strength. Macroeconomic and geopolitical risks – from trade disruptions to sovereign debt concerns and military escalations – provide ongoing support for gold’s role as a safe haven.

Australian property

MVA’s index caps its constituents at 10%, ensuring no individual REITs or subsectors dominate, and this has been the main driver of its outperformance of the S&P/ASX 200 A-REIT benchmark by over 6% since the beginning of the year. This underscores the importance of diversification beyond concentration in a single name and the dangers of overexposure to a single subsector, with Goodman making up 40% of the S&P/ASX 200 A-REIT index. Investors wishing to achieve a diversified exposure to A-REITs for income and capital growth while paying passive fees (only 0.35% p.a.) should consider MVA.

Australian equities

The Australian equity market has been one of the best-performing equity markets this year, outperforming both US and international stocks, however some sectors have experienced negative returns. The second largest sector, materials, is one notable laggard, with disparate returns across stocks, and Trump’s most recent tariff announcements targeting copper has impacted the entire mining industry. The dispersion in returns across stocks and sectors in Australian equities, as well the heavy concentration in banks and mining companies, presents a risk for the S&P/ASX 200, with CBA alone making up over 12% of the index. An approach with more diversified exposure to the Australian economy could be prudent into the second half of 2025. GMVW is an Australian equity strategy that combines investors' funds and borrowed funds to invest in the VanEck Australian Equal Weight ETF (MVW).

Emerging markets equities

Throughout much of the turbulence that has impacted developed markets (including the “liberation day” tariff shock, escalation of two big wars, and the deteriorating outlook of US fiscal policy), emerging markets have barely batted an eyelid. These countries make up around 12% of MSCI’s All Country World Index, yet most Australians do not have proportionate international equity exposure to this asset class. Emerging markets generally have lower levels of government and/or total economy debt, allowing their central banks to focus solely on inflation, providing a solid base for economic growth. Further, many of the headwinds faced by developed markets are tailwinds for emerging markets, including a weaker US dollar and surging commodity prices.

Value international equities

Value has had a renaissance during the first half of 2025, as equities globally appeared to be priced to perfection at the start of the year. We think there is a strong rationale for focusing on value companies as part of a diversified global equity approach for investing through the cycle. Value companies could continue to perform well into the second half of 2025 if investors remain wary of overpaying for growth. HVLU is an Australian dollar-hedged version of VLUE for investors wishing to manage their desired currency exposure.

Australian corporate bonds

RBA cuts coupled with persistent labour market tightness could see credit spreads grind tighter and yields fall, providing a tailwind for fixed rate corporate bond performance. Investment grade Australian bonds, we think, warrant consideration in a diversified bond portfolio. One way to gain access to a portfolio of the highest yielding investment grade corporate bonds is via PLUS, which invests in a diversified portfolio of Australian dollar denominated bonds that predominantly consist of the highest yielding investment grade corporate bonds issued in Australia.

Key risks

An investment in any of the funds may carry risks associated with: ASX trading time differences, financial markets generally, individual company management, industry sectors, foreign currency, country or sector concentration, hedging, political, regulatory and tax risks, fund operations and tracking an index. GMVW borrows money to increase the amount it can invest. While this can result in larger gains in a rising market, it can also magnify losses in a falling market. The greater the level of gearing in the Fund, the greater the potential loss of capital. ALFA risks include short selling risk, leverage risk, prime broker risk and material portfolio information risk. While it is not possible to identify every risk relevant to your investment, we have provided details of the risks that may affect an investment in the relevant product disclosure statement and the target market determination at vaneck.com.au