In The Cerulli Edge – Asian Monthly Product Trends for November 2022, the firm cited BetaShares tracking that found the market cap of exchange-traded funds (ETFs) in Australia grew 44 per cent year-on-year in 2021 to $136.9 billion.
Alongside recovery from the shock of COVID-19, $232 billion was net new money, the highest annual flows into the sector on record.
Even in difficult market conditions, Cerulli said new products are appearing, with five new products launched in August 2022, bringing the total number of products listed on the ASX as of September 2022 to 304.
While the market is diversified, the firm said it is still heavily dominated by equity products.
According to Morningstar, assets have dropped from US$67.2 billion in equity at the end of 2021 to US$58.5 billion by September 2022, which is still more than all other asset classes put together.
Equity products also dominate net new flows, and, based on the first nine months of 2022, the figure is likely to be similar to the US$12.1 billion of net new flows into equity products recorded in 2021.
Looking ahead, Cerulli said short-term flows are likely to depend on market movements. The firm added that optimism around inflation figures from the US and other markets has led to a bounce in global equities, though there could be a further dip as many states are likely to encounter recession in 2023.
“Investors’ continued preference for low-cost products indicates a promising outlook for the ETF sector, even if there is a sense that new product launches are becoming too niche,” said Ken Yap, managing director of Asia at Cerulli.
“With so many products now available, consolidation of assets in existing products rather than the pressure to keep launching something new could become a priority.”
The most recent BetaShares research, released in November, found that ETF assets under management increased by $7.3 billion to $131.7 billion, a 5.9 per cent increase a month earlier, which the firm said was mostly due to a “dramatic comeback” in local and global share markets.
