The Australian ETF industry continued its “steady drive forward” in 2016 and broke several records, according to automated investment firm Stockspot.
The industry’s funds under management (FUM) grew by around $4.3 billion, experiencing growth of 7 per cent in the last quarter alone, the company said.
FUM also surpassed the $25 billion milestone, which Stockspot chief executive Chris Brycki said highlighted the “increasing sophistication of Australian investors embracing ETFs as an alternative to direct shares or actively managed funds”.
“Globally, investors put more money into ETFs than actively managed funds for the 10th year straight at the end of 2016,” Mr Brycki said.
“The trend is mirrored in the steady drive forward of the Australian ETF market which experienced another positive quarter for FUM growth and returns.”
Much of these inflows were attributable to new money, according to BetaShares, which said the industry reached a record $22 million in trade value over the year.
BetaShares managing director Alex Vynokur said this strong growth in the Australian industry reflected the global ETF sector.
“The increasingly dynamic nature of the Australian market is also in line with the growth trend of the global ETF industry, which received a record high of US$389 billion in net inflows in 2016 and now totals some US$3.5 trillion in FUM,” Mr Vynokur said.
He said 89 per cent of the inflows into the Australian ETF sector were netted by passive products, with smart beta ETFs accounting for 25 per cent of total inflows alone.
VanEck recently commented that smart beta ETFs were particularly attractive to investors in 2016 as they “provided investors with the opportunity to achieve targeted outcomes and higher risk-adjusted returns” amid considerable volatility.