Vanguard’s exchange traded funds (ETF) range, excluding the May launched VACF, returned 8.02 per cent during 2016 off the back of healthy Australian and international equities.
According to Vanguard’s ETF quarterly report, the total Australian ETF cashflow for 2016 finished at $3.1 billion and Vanguard received 50 per cent of total cash flows into the ETF market.
Vanguard said most equity ETFs finished higher and fixed income finished lower in the December quarter thanks to US market sentiment following the presidential election and the December interest rate rise.
The firm’s Australian shares ETFs returned between 10.04 and 16.11 per cent over 12 months. Small companies sector (VSO at 16.11 per cent) and property securities (VAP at 13 per cent) were the best performing equity ETFs.
“International equity markets also had a healthy quarter, with all Vanguard global shares ETFs delivering positive returns, aside from Asia ex Japan,” the report said.
“The best performing international ETFs for 2016 were the Total US Market (VTS 13.21 per cent) and the Emerging Markets ETF (VGE 11.9 per cent).”
Vanguard said growth should remain low and should not stagnate in 2017.
“Higher inflation should be difficult to consistently attain despite ever-tightening labour markets; and further monetary stimulus in the form of negative interest rates will prove unproductive in spurring growth,” the report said.
“Low levels of global growth and a modest recovery can be explained by three longer-term, supply-side forces — weakening demographics, expanding globalisation, and advancing digital technology.”
