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Aussie ETFs continue to boom, says Morningstar

Aussie ETFs continue to boom, says Morningstar

Taylee Lewis

The Australian Exchange Traded Fund industry is continuing to grow, with assets increasing to $18.29 billion in the June quarter, says Morningstar.

A Morningstar ETF Investor report found that the Australian ETF industry grew to $18.29 billion in June, up from $17.62 billion at the end of March.

Morningstar research analyst, Alex Prineas, said the June quarter was also notable for the number of new ETFs entering the market – a record 14 new ETFs were launched.

Moreover, Mr Prineas pointed out that ETF operators are increasing their focus on China.

“At the same time as ETF operators and index compilers are increasing their focus on the region, we’ve seen a crash in the China A-share market,” he said.

China A-shares fell almost 30 per cent in June with volatility remaining high in July, with a single day drop of eight per cent.

As a result, Chinese authorities responded by banning short-selling and encouraging state-owned enterprises to buy stocks, Mr Prineas said.

“However an interesting development for ETF investors was that even when A-shares were suspended many A-share ETFs continued to trade,” he said.

“Curiously some ETFs even traded at a large discount to the index.

“While that may sound problematic, we think it’s better to be able to trade at a discount than to be unable to trade at all.

“Secondly, it is arguable that the discount was not real – the underlying stocks were suspended so at that point the index values were arbitrary,” Mr Prineas said.

The report found that Magellan Global Equities grew its assets in the quarter by $80 million. Vanguard also grew its book by $76.9 million to $517.7 million.

Conversely, iShares MSCI Emerging Markets (AU) shrank by $127.8 million to $390.5 million.

 

Aussie ETFs continue to boom, says Morningstar
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