2 epic ETFs to target an average 16.2% annual return
My portfolio is packed with high-performing exchange-traded funds (ETFs). They help me diversify my portfolio, but they haven’t compromised the returns I’ve made. Many UK funds regularly deliver spectacular returns that smash the broader stock market average.
Take the following ETFs: L&G Gold Mining ETF (LSE:AUCP) and iShares Digital Security ETF (LSE:LOCK). These funds have enjoyed an excellent average annual return of 16.2% during the last five years.
The question is, can these popular products continue delivering excellent returns?
Striking gold
Gold’s stunning price surge has grabbed significant media attention in 2025. But the yellow metal’s rush to new record highs is no new phenomenon.
Indeed, gold’s on a multi-year bull run that’s driven funds like the L&G Gold Mining ETF through the roof. This particular product’s delivered an average yearly return of 19.1% over the last five years.
This reflects in large part the ‘leverage’ effect the fund benefits from. It’s risen more sharply than gold itself, reflecting the fact that miners’ profits can explode when gold prices increase.
In total, this fund holds shares in 36 different gold miners. This includes industry heavyweights like Newmont, Angico-Eagle, and AngloGold Ashanti. These are businesses with large project portfolios, a quality that spreads out (if not totally eliminates) the threat of production stoppages on overall returns.
Can gold prices continue rising, though? I think they can, supported by macroeconomic factors (like a depreciating US dollar, interest rate cuts, and trade tariffs). Growing geopolitical tensions could also drive the safe-haven commodity to fresh peaks.
Security guard
Concerns over whether an AI bubble has formed continue to weigh on technology stocks. One tech segment that I don’t think faces the same danger is cybersecurity.
This is why I’m confident the iShares Digital Security ETF can continue deliver stunning returns. Its average yearly return since November 2020 is 13.2%.
Cyberattacks are becoming more numerous and increasingly severe. The massive attack on Jaguar Land Rover that took a huge chunk out of Q3 GDP underlines the scale of the threat.
With bad actors increasingly using AI, and state-supported intrusions also becoming more commonplace, having robust online defences is becoming increasingly critical.
Reflecting this, analysts at Global Market Insights reckon the global cybersecurity market will more than double in size over the next decade, to $55bn.
The iShares Digital Security fund provides a well-diversified way for individuals to target this opportunity. It includes industry heavyweights like CrowdStrike, Cloudflare, and Palo Alto alongside smaller players. These are businesses with excellent brand power, strong records of innovation, and deep pockets for future R&D.
A high-profile systems failure can shatter a security provider’s prospects overnight. This fund, which has holdings in more than 100 different tech stocks, substantially reduces this risk for investors.
Information technology earnings can be highly cyclical. As such, returns from this iShares ETF could disappoint during economic downturns. But over the long term I expect it to continue outperforming.
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Royston Wild has positions in Legal & General Ucits ETF Plc – L&g Gold Mining Ucits ETF and iShares IV Public – iShares Digital Security Ucits ETF. The Motley Fool UK has recommended Cloudflare, CrowdStrike, and Palo Alto Networks. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.
