Understanding ETFs: Potential Benefits and Expectations for 2025

Exchange-traded funds (ETFs) have become one of the most popular investment vehicles for retail and institutional investors. They offer a unique combination of diversification, liquidity, and cost-effectiveness, making them an attractive option for those looking to build a robust investment portfolio. In this article, we’ll explore what ETFs are, the different types, and their benefits. We’ll also take a closer look at the top-performing ETFs in 2025 and market expectations for the rest of the year.

What Are ETFs?

ETFs are investment funds that trade on stock exchanges, much like individual stocks. They typically track an index, sector, commodity, or other asset classes, allowing investors to gain exposure to a broad range of securities without buying each one individually. ETFs combine the diversification benefits of mutual funds with the flexibility and liquidity of stocks.

Types of ETFs

ETFs come in various forms, catering to different investment strategies and goals. Here are some of the most common types:

● Index ETFs: Track a specific index, such as the S&P 500 or FTSE 100. They are designed to replicate the performance of the index they follow.

● Sector ETFs: Focus on a specific sector, such as technology, healthcare, or energy. They allow investors to target industries they believe will outperform the broader market.

● Commodity ETFs: Invest in physical commodities like gold, silver, or oil. They provide exposure to commodity prices without the need to own the physical asset.

● Bond ETFs: Track bonds, such as government or corporate bonds. They are popular among income-focused investors seeking regular interest payments.

● International ETFs: Provide exposure to foreign markets, allowing investors to diversify geographically.

● Thematic ETFs: Focus on specific themes or trends, such as property, clean energy, artificial intelligence, or electric vehicles.

● Inverse ETFs: Are designed to profit from a decline in the value of an underlying asset or index. They are often used as hedging tools.

● Leveraged ETFs: Use financial derivatives to amplify the returns of an underlying index. They are riskier and typically used by experienced traders.

Benefits of Using ETFs for Investment Portfolios

Diversification: ETFs provide exposure to a wide range of assets, reducing the risk associated with investing in individual securities.

Liquidity: ETFs trade on stock exchanges, allowing investors to buy and sell shares throughout the trading day at market prices.

Cost-Effectiveness: ETFs generally have lower expense ratios compared to mutual funds, making them a cost-efficient investment option.

Transparency: ETFs disclose their holdings daily, giving investors full visibility into the assets they own.

Flexibility: ETFs can be used for various investment strategies, including long-term investing, short-term trading, and hedging.

Tax Efficiency: ETFs typically generate fewer capital gains distributions compared to mutual funds, making them more tax-efficient.

Top-Performing ETFs in 2025 (YTD)

According to data from brokstock.co.za, several ETFs have delivered impressive performances since the beginning of 2025. Here are some of the top performers:

1. Precious Metals (Gold and Platinum) and Broader Commodities:

● 1Invest AfricaGold (ETFGLD) – 45.9%

● New Gold Issuer Ltd (GLD.JSE) – 43.9%

● SPDR Gold Trust (US) (GLD.NYSE) – 32.1%

● Satrix RESI ETF (STXRES) – 12.6%

● 1Invest AfricaPlatinum (ETFPLT) – 9.3%

   - Potential reasons:

● Geopolitical Tensions: Ongoing conflicts in Eastern Europe and the Middle East have driven safe-haven demand for gold.

● Inflation Concerns: Despite central banks' efforts to control inflation, persistent inflationary pressures in 2025 have kept gold prices elevated.

● Central Bank Diversification: Central banks, particularly in emerging markets, continue to increase gold reserves to reduce reliance on the US dollar.

● Weak US Dollar: The dollar has weakened in 2025 due to slower-than-expected US economic growth, boosting gold prices

● Commodity Supercycle: The global commodity supercycle has continued into 2025, driven by strong demand for metals and energy from emerging markets.

● Supply Constraints: Mining disruptions in South Africa, a major platinum producer, have tightened supply, supporting prices.

2. China and Emerging Markets

● SPDR S&P China ETF (GXC.NYSE) – 18.1%

● iShares MSCI China ETF (MCHI.NASDAQ) – 12.5%

● Sygnia Itrix New China Sectors (SYGCN) – 10.1%

● Satrix MSCI China Feeder (STXCHN) – 8.7%

   - Potential reasons:

● Economic Stimulus: China has rolled out significant fiscal and monetary stimulus in 2025 to counter slowing growth, particularly in the property sector.

● Tech Sector Recovery: After years of regulatory crackdowns, China’s tech sector has stabilised, with companies like Alibaba and Tencent showing strong earnings growth.

● Green Energy Push: China’s aggressive investments in renewable energy and electric vehicles have boosted related sectors.

● Emerging Market Appeal: As developed markets face stagflation risks, investors have turned to emerging markets like China for higher growth potential.

3. Regional Market Exposure (Europe and UK)

● Sygnia Itrix Euro Stoxx 50 (SYGEU) – 15.6%

●  Sygnia Itrix FTSE100 (SYGUK) – 10.1%

● Vanguard FTSE Europe ETF (VGK.NYSE) – 9.7%

● Global X MSCI Greece ETF (GREK.NYSE) – 9.4%

   - Potential reasons:

● Inflation Control: The European Central Bank’s successful inflation control has boosted consumer and investor confidence.

● UK Market Recovery: The FTSE100 has benefited from strong performances in the financial and commodity sectors, and a weaker pound boosting exports.

● Energy Transition: Europe’s focus on renewable energy and energy independence has driven growth in green-related companies.

● Greece’s Economic Revival: Greece has seen increased foreign investment and tourism in 2025, supporting its economic recovery.

4. Sector-specific Exposure:

● ETFMG Alternative Harvest (MJ.NYSE) – 18.3%

● iShares US Insurance ETF (IAK.NYSE) – 11.4%

      - Potential reasons:

      Cannabis and Alternative Investments

● Global Legalisation: Several countries, including Germany and Mexico, have fully legalised recreational cannabis in 2025, opening up new markets.

● US Federal Reform: The US has moved closer to federal cannabis legalisation, with bipartisan support for banking reforms and decriminalisation, boosting investor confidence.

● Medical Cannabis Growth: Increased acceptance of medical cannabis for treating chronic pain, epilepsy, and other conditions has driven revenue growth for companies in the sector.

Insurance and Financials

● Rising Interest Rates: The Federal Reserve’s higher-for-longer interest rate policy has improved returns on insurance companies’ investment portfolios.

● Climate Risk Management: Insurers have adapted to climate risks by adjusting premiums and diversifying their portfolios, leading to stronger underwriting results.

● Economic Stability: A stable US economy in 2025 has supported demand for insurance products, particularly in commercial lines.

Market Expectations and Trends:

Top analysts have shared their expectations for ETF performances until 2030:

1. Continued Growth in Technology ETFs: Analysts expect technology-focused ETFs to remain strong performers, driven by innovation and increasing AI adoption, automation, and renewable energy technologies.

● AI Boom: The global AI market is projected to grow at a CAGR of 37.3% from 2023 to 2030, reaching $1.8 trillion by 2030 (Grand View Research).

● Semiconductor Demand: The semiconductor industry is expected to grow 6% - 8% annually through 202, driven by AI, EVs, and IoT (Gartner).

● Cloud Computing: The cloud computing market is forecasted to grow at a CAGR of 17.9% from 2023 to 2030, reaching $1.2 trillion by 2030 (Fortune Business Insights).

● Renewable Energy Growth: The global renewable energy market is expected to grow at a CAGR of 8.4% from 2023 to 2030, reaching $2 trillion by 2030 (Allied Market Research).

● Biotech Innovation: The global biotech market is projected to grow at a CAGR of 13.9% from 2023 to 2030, reaching $3.9 trillion by 2030 (Grand View Research).

2. Emerging Markets Recovery: International ETFs focusing on emerging markets, such as China and India, could rebound as these economies recover from recent challenges.

● China’s Recovery: China’s GDP is expected to grow 4.5% - 5% in 2025, driven by government stimulus and consumer spending (IMF). MCHI provides exposure to Chinese equities.

● Brazil’s Commodity Boom: Brazil’s economy is expected to grow 2.5% - 3% in 2025, supported by commodity exports (World Bank). EWZ tracks Brazilian companies.

● India’s Growth: India’s GDP is projected to grow 6% - 7% in 2025, driven by infrastructure spending and domestic consumption (IMF). EPI focuses on Indian equities.

3. Commodity ETFs to Stabilise: While commodity prices may not see the same explosive growth as earlier in the year, analysts expect them to remain stable, supporting commodity-focused ETFs.

● Gold Demand: Gold prices are expected to remain elevated due to inflation and geopolitical risks. The World Gold Council forecasts steady demand for gold in 2025, driven by central bank buying and safe-haven demand.

● Copper Demand: Copper demand is expected to grow 3% - 4% annually through 2025, driven by the energy transition (CRU Group). COPX provides exposure to copper mining companies.

● Uranium Revival: The uranium market is projected to grow at a CAGR of 6.5% from 2023 to 2030, driven by nuclear energy adoption (Fortune Business Insights). URA focuses on uranium producers

Why BROKSTOCK is the Best Investment Platform

When it comes to investing in ETFs, BROKSTOCK stands out as one of the best platforms available for South African investors. Here’s why:

● Single Wallet Investment:

BROKSTOCK offers a single wallet investment feature, allowing investors to manage all their investments in one place. This simplifies the investment process, making it easier to track and manage portfolios across different asset classes, including ETFs, stocks, and crypto.

● Wide Range of ETFs:

BROKSTOCK provides access to a broad selection of ETFs, including local and international options from top-notch providers. Whether you’re looking for index ETFs, sector ETFs, or thematic ETFs, BROKSTOCK has you covered.

● Low Fees:

BROKSTOCK is known for its competitive fee structure. With low trading fees and no hidden charges, it’s a cost-effective platform for beginner and experienced investors.

● User-Friendly Interface:

The platform is designed with the user experience in mind. Its intuitive interface makes it easy to research, buy, and sell ETFs, even for those new to investing.

● Advanced Tools and Analytics:

BROKSTOCK offers advanced tools and analytics to help investors make informed decisions. From real-time market data to performance tracking, the platform provides everything you need to stay ahead.

● Educational Resources:

BROKSTOCK is committed to investor education. The platform offers a wealth of resources, including articles, webinars, and market insights, to help users understand a wide variety of investment products.

● Strong Customer Support:

BROKSTOCK’s customer support team is highly responsive and knowledgeable, ensuring that investors receive the assistance they need, whenever they need it.

ETFs offer a versatile and cost-effective way to invest in various asset classes and markets. Their benefits, including diversification, liquidity, and transparency, make them an excellent choice for both novice and experienced investors. In 2025, ETFs have already delivered strong performances, driven by global economic recovery, technological advancements, and favourable monetary policies.

For those looking to invest in ETFs, BROKSTOCK is the ideal platform. With its single wallet investment feature, selection of ETFs, low fees, and user-friendly interface, BROKSTOCK makes it easy to build and manage a diversified portfolio. Whether you’re a seasoned investor or just starting out, BROKSTOCK provides the tools and resources you need to succeed in the world of ETFs.