The BetaShares year-end review noted that the ETF industry had recorded its highest ever annual growth in 2014, with funds under management increasing by $5 billion to end the year at $15 billion.
“Net inflows contributed to 86 per cent of the annual growth of the market in 2014, with approximately $4.3 billion of new money deployed into ASX-traded exchange traded funds.
“This was an increase of 180 per cent on net inflows compared to 2013. The growth is particularly striking when compared to retail managed funds, which recorded an approximate 3 per cent decrease in net inflows in the 12 months to end September 2014,” BetaShares said in the report.
iShares, Vanguard, BetaShares and State Street continued to capture 94 per cent of the industry’s net flows, said the report.
“Twelve new products were launched throughout the year, a slight increase on 2013 (11 products were launched in 2013),” it said.
BetaShares managing director Alex Vynokur said ETFs providing exposure to development market international equities attracted the largest inflows in 2014 at approximately $1.4 billion.
“Australian high-yield equity products attracted $720 million of new money, demonstrating the continued desire of investors for income, particularly as capital growth stalled in 2014,” Mr Vynokur said.
Outflows from ETFs were “very low” and largely restricted to commodities such as unhedged gold, he added.
“Notwithstanding back-to-back years of +50 per cent growth, we believe the Australian ETF market will continue to grow strongly in 2015.
“We forecast that total funds under management at the end of 2015 will be in the range of $21–23 billion. We also expect that the number of product launches will be significantly higher in 2015,” he said.
