Australian exchange traded funds (ETFs) are expected to continue posting strong growth in 2017, with approximately 230 funds trading by the end of the year, according to BetaShares.
The BetaShares Australian ETF Review — End of Year Review 2016 also said that despite market volatility, the Australian ETF industry posted record high levels in terms of both funds under management (FUM) and trading activity in 2016.
Such growth was driven by new money, which accounted for around 80 per cent of the increase, and asset valuation appreciation (20 per cent) which indicated the underlying growth in the industry irrespective of market movements.
FUM in the Australian ETF industry in 2016 went up by $4.4 billion counting year-on-year and hit a new all-time record of $25.8 billion, according to the study.
The industry managed to add $1.2 billion of FUM in December, which translated into a five per cent monthly growth.
As far as trading activity in 2016 was concerned, the industry also reached record levels, with $22 billion of traded value throughout the year.
According to BetaShares, the year also saw strong product development, with 40 new funds being launched versus 11 product closures.
At the same time, passive products captured the bulk of net flows in Australia, with a market share of 89 per cent of the total, including 25 per cent of the net inflows in ‘smart beta’ products.
Furthermore, international equity products managed to attract the largest amounts of new money over the year with $1.1 billion of net inflows, followed by Australian equities at $900 million.
BetaShares’ managing director, Alex Vynokur, stressed that the dynamic nature of the Australian market was in line with the growth trend of the global ETF industry, which attracted a record high of US$389 billion in net inflows in 2016.
“We believe the industry will continue to grow strongly in 2017, and we forecast total industry FUM to be in the range of $32 and $35 billion by the end of this year and approximately 230 funds trading by year end,” he said.
