The Australian exchange-traded fund (ETF) industry saw 66 new products launched on local exchanges in 2024 – the largest year on record.
According to new data from Betashares, this compared to 56 launches in 2023.
However, 30 products also closed over 2024, more than three times the amount (eight) of closures seen in the year prior.
Altogether, 403 exchange-traded products are now trading on the ASX and Cboe
Notably, the ETF market enjoyed a number of new records last year, including the total industry market capitalisation of $246.3 billion, representing 38.8 per cent year-on-year growth.
Overall, the industry grew $68.9 billion in 2024 – an industry record in terms of annual growth.
Reflecting on its predictions for 2024, Betashares had previously posited that the market would continue to benefit from increased investor adoption and inflows, combined with positive markets.
It also forecast total industry FUM would exceed $200 billion at the end of 2024 but noted that it could reach as high as $220 billion “depending on market conditions”.
“While we were correct regarding positive inflows and market growth, we underestimated the scale of net flows by some margin, while market conditions were very conducive for growth exposures which contributed strongly to the growth in market size,” Betashares said this week.
“Looking ahead, we expect the ETF industry will exceed $300 billion by the end of 2025 should market conditions remain positive.”
Flows remain strong, but concentrated
Many fund managers rightfully predicted that ETF industry flows in 2024 would quickly surpass the record previously set in 2021.
In fact, net new money in 2024 hit $30.8 billion, Betashares revealed, doubling the $15 billion of net flows received in 2023.
However, flows remain concentrated among some top industry players.
“Vanguard, Betashares and iShares were the top three issuers in terms of flows this year, recording ~$24.4 billion in net inflows between them,” Betashares detailed.
Collectively, these three companies captured nearly 80 per cent of all flows.
Including fourth place VanEck, which saw inflows of approximately $6 million, the top four issuers accounted for a whopping 98.9 per cent of flows.
Unpacking flows further, the ETF provider found that passive exposures again led the way in 2024, largely via market capitalisation-oriented passive products, which claimed 81 per cent of total flows.
“Smart beta products received ~21 per cent of flows, whilst active ETFs in total had net outflows of ~$734 million, driven by continued redemptions from Magellan’s Global Fund,” Betashares said.
Namely, the Magellan Global Fund (Open Class) (Managed Fund) saw $2.8 billion in outflows in 2024, notably ahead than the $431 million lost by second place, the Betashares Australian Sustainability Leaders ETF.
On the other side of the coin, the top 10 funds in terms of inflows all stemmed from the top four issuers, with Vanguard’s Australian Shares Index ETF (VAS) leading the charge with $2.29 billion.
This was followed by the iShares S&P 500 ETF (IVV) with $2.05 billion and the Vanguard MSCI Index International Shares ETF (VGS) with $1.9 billion.
