Australia’s exchange-traded product (ETP) market is growing steeply and is set to finish 2017 with a projected $35 billion, according to data from VanEck and the Australian Securities Exchange (ASX).
ETP assets ended October at a record high of $33.22 billion, which represented a 39 per cent growth year-on-year, with flows hitting $6.087 billion.
According to the VanEck/ASX findings, investors had mostly used ETPs to access markets offshore and to broaden their portfolios.
As far as asset classes were concerned, international equity ETPs have been the most popular with year-to-date flows in comparison to $1.95 billion for Australian equity ETPs.
Also, dedicated European and emerging market equity ETPs were seen to have become more popular as investors had chased value in those markets.
In the Australian equities space, smart beta shined with flows to the VanEck Vectors Australian Equal Weight ETF (MVW) totalling $148 million.
VanEck Australia’s managing director, Arian Neiron, said: “Investors and their advisers continue to replace actively managed funds with MVW as their core Australian equities position due to its low cost and outperformance; MVW has outperformed the S&P/ASX 200 Index by 2.07 per cent so far this year and by 4.04 per cent per annum over the past three years.”
At the same time, the flows of fixed income ETPs amounted to $450 million over year to date, while cash ETPs attracted $468 million.
Additionally, there were several Australian fixed income ETPs launched this year, which included the VanEck Vectors Australian Corporate Bond Plus ETF (PLUS) and VanEck Vectors Australian Floating Rate ETF. October also saw the launch of the Vanguard Global Aggregate Bond Index (Hedged) ETF.
“This year we have seen eight new ETFs launched and two active exchange traded managed funds (ETMFs),” Neiron said.
“Reflecting geopolitical risks, we’ve also seen a trend towards gold bullion ETFs, with tensions between North Korea and the US causing some investors to move into the safety of gold assets.
“Based on this sharp trajectory of growth, we expect the ETP industry will grow to between $70 billion – $80billion dollar within five years.”
