Australian ETF industry breaks new records in 2017
The Australian exchange traded fund (ETF) industry has broken a new record in 2017 and saw a significant 40 per cent growth in funds under management (FUM) which stood at $36 billion, against $10.2 billion in 2016, according to BetaShares’ study.
The firm’s “Australian ETF Review – End of Year review 2017” study also revealed that 76 per cent of growth came from net inflows, with $7.8 billon flowing into the industry within the past year.
Another 24 per cent came from net asset value appreciation, driven by a strong market performance in most regions, it said.
Also, ETF trading activity broke its record with over $32 billion of value traded which represented a 41 per cent growth compared to the previous year.
BetaShares’ managing director, Alex Vynokur noted that growth in Australian ETF activity followed the global trends where the ETF industry received its highest ever levels of net inflows on record (US$633 billion).
“It has been a stellar year for the Australian ETF market. Growth has been very strong. We’ve seen a raft of products launched, covering more and more gaps in the market, and significant inflows to existing funds across all asset classes,” he said.
Passive products continued to capture the bulk of inflows, with a 92 per cent share of flows which translated into a three per cent growth compared to 2016.
Also, within passive products, index-tracking funds dominated with 79 per cent of flows and at the expense of smart beta products which saw a drop of its share of flows to 13 per cent, the firm said.
“We expect both active ETFs and the smart beta ETFs to continue to grow in popularity as new products are launched and the industry matures,” Vynokur added.
For the third year in a row, international equities products ranked number one for inflows, with $3.2 billion of net inflows and were followed by Australian equities at $2.7 billion and fixed income ($1.1 billion).
“2017 ended with a very strong result. We believe that the industry will continue its rapid rise in 2018, and forecast total industry FuM at end 2018 to be in the range of $47 -$49 billion, with approximately 260 funds trading by year end,” Vynokur said.
“Continued inflows into equities, both international and domestic, and strong growth in fixed income, shows that investors are using traded funds across a number of asset classes to diversify their portfolios.”
AUTHOR
Oksana Patron
Recommended for you
Clime Investment Management has faced shareholder backlash around “unsatisfactory” financial results and is enacting cost reductions to return the business to profitability by Q1 2025.
Amid a growing appetite for alternatives, investment executives have shared questions advisers should consider when selecting a private markets product compared to their listed counterparts.
Chief executive Maria Lykouras is set to exit JBWere as the bank confirms it is “evolving” its operations for high-net-worth clients.
Bennelong Funds Management chief executive John Burke has told Money Management that the firm is seeking to invest in boutiques in two specific asset classes as it identifies gaps in its product range.
