The underlying assets mentioned above aren’t inherently more ‘complex’ than each other. However, the investment strategies that fund managers employ to generate returns or gain exposure to the asset can be. More on this later.

Why ETF naming is important

Below, I will guide you through the most common strategies and how ETFs are named by their issuers. This is not only to be congruent with Australian Securities and Investments Commission (ASIC) guidelines set out in ASIC’s Regulatory Guide 282 [2], but also to impart information on the investment strategy to the end user.

It is important to grasp the concepts of the ETF naming convention. The reason for this is when you initially buy into an ETF, unlike an unlisted managed fund, there is not a prerequisite to read through and sign off on the product disclosure statement (PDS) for the product before investing. 

The introduction of the ‘complex’ label by ASIC in 2022 set the groundwork for how an ETF using more advanced methods for exposure should be named. In April 2025, all funds already listed, that were not compliant with this framework, changed their names to fit within the guidelines.
 

‘Index tracking/passive’ strategies

Representing the most popular type of ETF strategy listed on ASX (both in funds under management and number of products available), passive strategies seek to track the performance of an index (e.g. the S&P/ASX 200), a commodity (e.g. gold or cryptocurrency) or a currency. 

When tracking an index, the weightings of the securities in the ETF will seek to match the weightings of the securities in its respective index as closely as possible (known as the ‘full replication’ method), meaning larger companies will have a greater weight in the ETF.

Passive ETFs issued by different fund managers that aim to track the same assets (e.g. top 200 ASX companies) can be differentiated in a few ways, including fees and costs, benchmark used, bid/askspread and tracking error (i.e. the difference between the price behaviour of a portfolio against the benchmark). 

ETFs that do not have the labels mentioned below in their title are normally passive strategies, although we recommend that you thoroughly read the PDS and target market determination before investing into a product to determine the strategy employed and the assets you will gain exposure to.
 

Active strategies

With 54 out of 115 listed on ASX being active ETFs over the past two years [3], active strategies continue to increase in popularity among investors. 

For an active strategy, fund managers take a direct approach in the buying and selling of assets within the portfolio, with the goal of outperforming the benchmark it is tracking (known as ‘generating alpha’). 

Successful active managers will rely on the research, investment analysis and forecasting available to them, mixed with their own experience and judgement to discover opportunities in the market. 

Keeping that in mind, there is also the risk that the manager underperforms against the benchmark (an index against which they compare their performance).

An active strategy is denoted by ‘Active ETF’ in its name. The following examples are for illustrative purposes only and investors should always conduct their own research to ensure that the product is right for them:

• Australian equities - Macquarie Core Australia Equity Active ETF (ASX:MQAE).
  
• Global equities - Firetrail S3 Global Opportunities Fund – Active ETF (ASX:S3GO).
  
• Fixed interest - PIMCO Short Term Active Yield Active ETF (ASX:EARN).

Smart beta strategies

Smart beta strategies differ from the typical passive strategy which uses the traditional market capitalisation approach of selecting shares, bonds or other assets. 

This is achieved by basing the strategy on one or more predetermined factors or investment methodologies and applying a filter on top of the index it is tracking. Investment decisions are made based on this filter, with little to no human element beyond it (i.e. the decisions are automated).

It is for this reason that smart beta strategies are often seen as a blend of passive and active investing.

Types of smart beta strategies include:

• Equal weighting - a strategy employed to mitigate concentration risk. The same weight is given to each holding in the fund. (e.g. VanEck Australian Equal Weight ETF, ASX:MVW).
  
• Fundamentally weighted - utilising fundamental business criteria such as revenue, earnings, dividends etc. instead of market capitalisation to evaluate a company. An example of an approach that targets dividends often includes mention of ‘yield’ in their name (e.g. Betashares S&P Australian Shares High Yield ETF, ASX:HYLD).
  
• Factor/multifactor based - selecting investments based on a single or multiple factor, including growth, value, credit rating, volatility etc. (e.g. iShares Edge MSCI Australia Multifactor ETF, ASX:AUMF).

Complex strategies

As outlined in ASIC’s Regulatory Guide 282, ETFs with the ‘complex’ label included in their trading names will employ investment strategies that go beyond the scope of the simple ‘long-only’ investments. Specifically, ASIC RG 282 requires the ‘Complex’ label to be applied to those ETFs with certain types of investment strategies or risks.

Examples can include the use of:

• Debt or leverage - using debt or borrowing funds to magnify the gains (and losses) of an investment strategy (e.g. First Sentier Geared Australian Share Fund Complex ETF, ASX:LEVR).
  
• Short selling - the borrowing of a security and selling it under the assumption that the share price will fall in the future (e.g. Plato Global Alpha Fund Complex ETF, ASX:PGA1).
  
• Derivatives, including future contracts, forwards, options and swaps - although there is much to cover on the topic of derivatives, at a high level, they are a financial contract between parties that derives its value from an underlying asset. They are commonly used to speculate on, hedge or leverage a position (e.g. Global X S&P/ASX 200 Covered Call Complex ETF, ASX:AYLD)

Do your research

Before investing into a new ETF, it is important to understand not only the asset you will be exposed to, but the investment strategy the fund manager is using to generate returns – and the instruments they may be using to access or replicate the asset. Always read the PDS and refer to a financial adviser should you have any more questions.

You can keep up to date with all of the latest investment products (including ETFs) by reading our ASX Investment Products Monthly Report, where you can find new listings, fund flows, fund size, fees, plus more.

From ASX

Investing in ETFs and ETPs has information on the features, benefits and risks of exchange traded funds and other exchange traded products.

-----------------------------------------

[1] ASX Investment Products Monthly Report – October 205. 
[2] https://download.asic.gov.au/media/wsinmjbc/rg282-published-7-november-2025.pdf
[3] Source: ASX
 

References:

https://www.asx.com.au/investors/learn-about-our-investment-solutions/etfs-and-other-etps

https://www.asic.gov.au/regulatory-resources/find-a-document/regulatory-guides/rg-282-exchange-traded-products/

https://am.jpmorgan.com/au/en/asset-management/institutional/insights/portfolio-insights/etf-perspectives/etf-australia-complex/

https://www.vaneck.com.au/smart-beta/