Fri, 12/07/2019 - 10:46
The Australian ETF industry surpassed the AUD50 billion milestone for the first time at the end of June, reaching AUD50.9 billion in funds under management (FUM), according to the BetaShares 2019 Half Year Review.
In only six months, the ETF industry grew 25 per cent, adding a significant AUD10.1 billion in FUM. Almost half of that growth (AUD4.4 billion) came from net inflows, up from AUD2.7 billion in the first half of 2018. Trading volume remained strong and increased by 11 per cent compared to the second half of 2018.
Notably, the first half of 2019 saw investors significantly increasing allocations to Fixed Income ETFs - in particular, Australian Bonds – with the category taking in almost AUD1.4 billion of new money. As at June 2019, Fixed Income had overtaken International Equities to become the number one category for net inflows, with International Equities receiving AUD1.3 billion.
BetaShares Chief Executive Officer, Alex Vynokur, says: “The pace of growth of the Australian ETF industry is well and truly on the rise”.
“Over the past few years, ETFs have become a popular choice for Australian investors to diversify their portfolios, which were traditionally very skewed towards local equities”.
“Australian investors now have access a wide range of ETFs, providing them with the tools to invest into all major asset classes, sectors and regions. At AUD50B we believe that the Australian ETF industry is now well and truly ‘on the map’,” he adds.
Passive index products received the vast majority of inflows for this half year (82 per cent), while Active and Smart Beta exposures each received 9 per cent share of flows.
At an issuer level, the inflows into the ETF industry so far this year have been slightly more concentrated than in 2018, with the two largest issuers for flows, Vanguard and BetaShares, receiving approximately 60 per cent of the industry net inflows combined.
Strong sharemarket performance saw geared share exposures perform the strongest during this period, with the BetaShares Geared Australian Equity Fund (hedge fund) (ASX: GEAR) up 45 per cent and the BetaShares Geared U.S. Equity Fund (hedge fund) (ASX: GGUS) up 41 per cent for the half year.
Product development was somewhat muted, with only seven new products launched, compared to ten new products launched in the first half of 2018.
“Despite the slow launch of new products so far, we do expect this to pick up in the second half of the year,” adds Vynokur.
“Given the fast growth of the Australian ETF industry in the first half, we are also upgrading our forecast for industry FUM by the end of 2019 from AUD50-AUD55 billion – which we anticipated at the beginning of the year – to a range of AUD55-AUD60 billion.”
The ETF industry grew by AUD2.25B (or 4.6 per cent) in June over its previous month, marking the second highest FUM monthly growth of all time. Net new money accounted for AUD821.7 million of the FUM surge over the past month.
Trading value decreased by 7 per cent month on month after May’s record month of trading, although it still ended up being the second highest month on record for trading value.
Products providing exposure to gold stocks were the number one performers, including BetaShares Global Gold Miners ETF – Currency Hedged (ASX: MNRS), which had a monthly return of 16.1 per cent.
Compared to the previous months, June was a relatively busy month for product launches. Three new funds were launched during this month including the BetaShares Legg Mason Emerging Markets Fund (managed fund) (ASX: EMMG).
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