10 ETFs Bell Potter believes are built for the market ahead

It's spring-cleaning season for Bell Potter's model ETF portfolio.

After years of growth stocks dominating investor portfolios, the investment landscape is beginning to look rather different. Inflation remains stubborn, bond yields are climbing, and the AI trade is facing renewed scrutiny.

Meanwhile, some of the market's most unloved sectors are suddenly looking attractive again.

It's against this backdrop that Bell Potter has unveiled a significant shake-up of its model ETF portfolio for the final quarter of 2026.

The changes follow a relatively resilient 12 months, with the portfolio returning 5.73% compared with its benchmark's 4.89%, based on a 60% growth allocation.

Bell Potter's Head of Investment Strategy, Rob Crookston, shared the latest report with Livewire and walked me through the thinking behind six key portfolio changes developed alongside Associate Strategist Evelyn Murdoch.

"This quarter’s changes are centred around 6 key themes, with a greater focus on efficient active exposure, value and diversification, while taking advantage of higher yields across property and fixed income," Crookston explains.

Here are the six opportunities catching their attention.

1. A little active management can go a long way

Bell Potter is increasing its exposure to so-called "Core Plus" strategies, which aim to offer investors the best of both worlds: broad market exposure and diversification, with an additional layer of active management designed to generate higher returns.

Unlike traditional active funds that can make large bets away from their benchmarks, Core Plus strategies stay relatively close to the index, seeking incremental outperformance without straying too far from market returns.

Bell Potter has added the Vinva Global Alpha Fund - Active ETF (ASX: V1AC) at 7.5% of its developed-market equities sleeve and increased the Macquarie Core Global Equity (Hedged) Active ETF (ASX: MQHG) from 12.5% to 15%.

Crookston's argument comes down to three things:

1. Small gains compound: Even modest outperformance can make a big difference. Active managers able to eke out an extra 2% annually above a 7% market return could leave investors approximately 20% wealthier after 10 years and 45% after 20 years.
2. They're easier to stick with: By keeping returns relatively close to the benchmark, investors may be less tempted to abandon their investments during periods of underperformance.
3. Lower costs: Core Plus strategies can offer active management at a lower cost than traditional high-conviction funds.

Bell Potter is sufficiently convinced by the approach that it's trimming its allocations to the Vanguard MSCI Index International Shares ETF (ASX: VGS) and its hedged counterpart, Vanguard MSCI Index International Shares (Hedged) ETF VGAD, to make room.

2. Increasing exposure to value stocks

Third time's a charm? This is now the third ETF article I've covered in recent weeks featuring the Vanguard Global Value Equity Active ETF (ASX: VVLU).

Market Matters' James Gerrish and Morgans' Andrew Tang have already thrown their support behind the fund. Now Bell Potter's Rob Crookston is joining the fan club. Gerrish prefers it to the iShares S&P 500 ETF (ASX: IVV), while Tang sees it as particularly well suited to markets increasingly dominated by quantitative investing.

For Crookston, there are good reasons why value stocks are attracting attention.

"Higher yields favour value. Sticky inflation and higher-for-longer rates have historically supported value, with the strongest relative returns vs growth when 10-year yields were in the 4–6% range."

He also points to the relationship between global economic activity and value's performance. Over the past 50 years, value has outperformed growth by approximately 1.8% annually during months when purchasing managers' indices (PMIs) were rising.

There's also the diversification argument. VVLU provides exposure to more than 900 companies, with less reliance on the technology giants dominating global indices.

Bell Potter has allocated 5% of its developed-market equities sleeve to VVLU, which charges an annual management fee of 0.28%.

It's also adding the Avantis Emerging Markets Equity Active ETF (ASX: AVTE) at 15% of its emerging-markets sleeve. AVTE targets attractively valued, profitable companies while reducing exposure to technology.

To make room, Bell Potter is trimming allocations to several existing active funds, including Fidelity Asia, Plato Global Alpha and Barrow Hanley.

3. Buying the property sell-off

Property investors have had a rough ride. Over the September quarter, global listed property fell 6.1%, while listed infrastructure declined 6.5%, as rising bond yields weighed on valuations.

But Bell Potter believes the punishment has gone too far.

"Property has de-rated sharply as global bond yields rose, leaving valuations that more than reflect the current rate environment."

Australian listed property is particularly interesting. Bell Potter's analysis shows the sector trading at a 28% price-to-earnings discount to the ASX 200, compared with a 20-year average premium of approximately 1%.

To capitalise, Bell Potter is adding two ETFs to its property and infrastructure sleeve:

• VanEck Australian Property ETF (ASX: MVA): 12.5% allocation, yielding approximately 5%.
• iShares Core FTSE Global Property Ex Australia (AUD Hedged) ETF (ASX: GLPR): 12.5% allocation, yielding approximately 5.35%.

Crookston also argues that property can help diversify portfolios at a time when market risks remain elevated and bond yields may be closer to their peak.

The additions are funded by reducing exposure to listed infrastructure, including the Lazard Global Listed Infrastructure Active ETF (ASX: GIFL).

4. Australian bonds are back in favour

Bonds might not be the most exciting asset class, but yields above 5% are becoming increasingly difficult to ignore. And Bell Potter believes Australian fixed-rate bonds are looking particularly attractive.

"With Australian bond yields now above 5% and the domestic economy slowing, we see an opportunity to lock in attractive income while adding duration protection should growth weaken further," Crookston says.

As a result, the broker is increasing its allocations to:

• State Street SPDR S&P/ASX iBoxx Australian Bond ETF (ASX: BOND): From 15% to 20%.
• Betashares Western Asset Australian Bond Active ETF (ASX: BNDS): From 35% to 40%.

Bell Potter is making room for these ETFs by reducing exposure to the Perpetual Diversified Income Active ETF (ASX: DIFF), which invests in floating-rate credit.

5. Moving towards higher-quality credit

While Bell Potter is warming to fixed-rate bonds, it's becoming more cautious about taking excessive credit risk.

"We are becoming more defensive within credit given the risk that spreads widen as tighter monetary policy flows through the economy," Crookston says.

In other words, higher interest rates could eventually start causing problems for borrowers, making lower-quality debt less attractive.

Bell Potter has therefore introduced the Vanguard Australian Floating Rate Bond Index ETF (ASX: VFLT) at 7.5% of its fixed-income sleeve.

The fund holds senior floating-rate bonds with an average AA- credit rating, offering a running yield of approximately 5.5%. At an annual fee of just 0.15%, it also provides a relatively inexpensive way to access higher-quality credit.

The allocation is funded by reducing exposure to the Macquarie Subordinated Debt Active ETF (ASX: MQSD) and Schroder Australian High Yielding Credit ETF (ASX: HIGH).

6. Gold gets dumped (well, sort of)

Sorry, PMGOLD. It's not you, it's your management fee.

That's effectively the message Bell Potter is sending to the Perth Mint Gold product (ASX: PMGOLD), which has been removed from its model portfolio.

The replacement? The Global X Gold Bullion ETF (ASX: GXLD), which charges 0.14% annually compared with PMGOLD's 0.15%. That's a saving of just one basis point, or $10 annually on a $100,000 investment.

But Bell Potter isn't falling out of love with gold itself.

The precious metal still accounts for 60% of its commodities sleeve, down from 75%, with the remaining allocation increasingly directed towards a broader basket of commodities.

The broker has lifted its exposure to the Global X Bloomberg Commodity Complex ETF (ASX: BCOM) from 25% to 40%.

"We increase BCOM from 25% to 40% of the commodities sleeve, broadening the portfolio’s exposure across energy, grains, metals, soft commodities and livestock and providing an additional hedge against inflation and oil-price risk," Crookston explains.

The strategy has already demonstrated its potential benefits.

BCOM returned 11.9% over the September quarter, benefiting from its energy exposure as oil prices surged amid renewed conflict in the Middle East.

The 10 ETFs catching Bell Potter’s eye

To wrap things up, the table below brings together all 10 ETFs catching Bell Potter's eye, including their investment strategies and annual management fees. Click on it to zoom in.