Investors are always on the hunt for high returns, and looking at past performance is a tempting way to pick an ETF. But is it the best strategy? In this episode of the Get Rich Slow Club, Tash and Ana review the top-performing ETFs of 2024 and explain why they wouldn't rush to invest in them – despite their strong returns.

The dangers of recency bias

A key theme in this episode is recency bias.

Tash explains: "Recency bias is essentially when investors place too much weight on recent events or trends, assuming they will continue indefinitely. It can lead to chasing high-performing shares or ETFs based on recent gains or panic selling after downturns ."

To avoid falling into this trap, Tash and Ana suggest investors should focus on long-term fundamentals, diversify their portfolios, and stick to a disciplined strategy like dollar-cost averaging . In short, chasing last year’s winners rarely leads to sustained success.

The top-performing ETFs of 2024

As promised, Tash and Ana break down the ten best-performing ETFs listed on the ASX . While these funds have delivered strong one-year returns, their long-term performance and associated risks warrant careful consideration.

10. BetaShares Crypto Innovators ETF (CRYP) – 46% return

This ETF provides exposure to companies in the cryptocurrency sector rather than directly investing in cryptocurrencies like Bitcoin or Ethereum. But, despite its strong performance in 2024, its return since inception remains negative at -11.3%.

"I actually bought this when it first came out, and I'm still in the negative," Tash reveals. "So even though it's up 46% this year, it's still negative overall."

This highlights the volatility of the crypto sector. While it can have big years, it also has huge drawdowns. Investors should be prepared for a rollercoaster ride if they choose to include crypto-related assets in their portfolios.

9. iShares Physical Gold ETF (IAA) – 50% return

This ETF tracks the price of gold , allowing investors to gain exposure to the precious metal without needing to buy and store it themselves.

Ana shares a common debate: "Would you rather have a lump of gold or a lump of land? With land, you can create value from it, rent it out, or develop it. With gold, its value is simply what people are willing to pay for it."

Gold is often seen as a safe haven asset, especially in times of economic uncertainty. Unlike shares or property, though, it does not generate income. This means its investment case relies purely on capital appreciation .

8. VanEck Gold Bullion ETF (NUGG) – 50% return

This ETF also tracks the price of physical gold, reflecting the surge in gold prices throughout 2024. Gold prices tend to rise during periods of inflation and market instability, which could explain its strong returns this year.

But as Tash and Ana point out, gold’s long-term returns are far lower than equity markets. While it can serve as a hedge in uncertain times, the extent of its inclusion in a portfolio should be considered against your risk profile.

7. Perth Mint Gold ETF (PMGOLD ) – 50% return

Another gold-related ETF, PMGOLD provides investors with exposure to physical gold held at the Perth Mint.

Ana shares her experience visiting the Perth Mint: "They actually pour gold bars in front of you, and you can buy the bowls because some gold gets stuck in them."

6. iShares China Large-Cap ETF (IZZ) – 54% return

This ETF provides exposure to the largest Chinese companies listed on the Hong Kong Stock Exchange. It allows Australian investors to invest in China's economic growth.

China's economy has faced challenges in recent years, but this ETF’s performance suggests a strong rebound. However, investing in China comes with political and regulatory risks that should not be overlooked. What's more, as we always stress, past performance isn't an indicator of future returns.

5. VanEck Video Gaming and eSports ETF (ESPO) – 56.8% return

This ETF focuses on the booming gaming and esports industry, providing exposure to video game developers, publishers, and related hardware companies .

"Gaming is huge," Ana says. "It’s a bigger industry than movies."

While the industry has seen rapid growth, it is also highly competitive. Companies need to continually innovate to stay ahead, which makes stock selection in this space challenging.

4. BetaShares Global Gold Miners ETF (MNRS) – 57% return

This ETF provides exposure to a diversified portfolio of the world's largest gold mining companies. However, its five-year average return is just 7.68% per year, demonstrating that short-term gains do not always translate to long-term consistency.

Gold miners are often more volatile than gold itself. This is because their profits depend not only on the price of gold, but also on their operational efficiency and exploration success.

3. BetaShares Video Games and Esports ETF (GAME) – 60% return

Another gaming-focused ETF, GAME has seen massive gains in 2024. However, since its inception in 2022, it has only returned 8.64% per year, showing that much of its growth has come in just this past year.

2. VanEck Gold Miners ETF (GDX) – 62.5% return

Another ETF focusing on gold mining companies, GDX has delivered strong returns in 2024. But its five-year average return is 8.95%, much lower than its one-year performance suggests.

1. Global X 21Shares Bitcoin ETF (EBTC) – 72.4% return

This ETF is the top performer of 2024, thanks to the surge in Bitcoin prices. However, Ana and Tash caution against assuming such returns will continue indefinitely.

"This is funny because I have a couple of friends who invest in crypto, and they'll be like: 'Oh my gosh, my crypto has done so much better than my ETFs,'" Ana says.

"And it's like, yes, of course, because you've only been investing for six months."

Why we wouldn’t buy these ETFs

Despite their strong 2024 performance, Ana and Tash remain sceptical about these ETFs for several reasons:

• Short-term gains don’t guarantee long-term success
• Sector concentration risks
• Lack of intrinsic value in some cases
• Speculative nature of certain ETFs

The takeaway: focus on long-term strategy

Reflecting on the list, Tash concludes: "These are the really fun ones that have done well in 2024, but be skeptical. Don't rush out and buy them just because they've performed well recently."

Ana agrees, reinforcing the importance of long-term investing: "It’s fun to look at what's done well, but always focus on a strategy that works for you over the long haul."

The key to getting rich slow is patience, diversification, and a commitment to the long term.

If this episode sparked something in you, give it a five-star rating, drop a review, or better yet, share it with a friend. And if you're just starting out, the first ten episodes will get the financial gears turning. Follow us at @getrichslowclub and catch our personal updates at @tashinvest or @anakresina.

Happy investing!