The Australian exchange-traded fund industry has overtaken the $50-billion milestone, according to the newly published report by BetaShares.
The 2019 Half Year Review reported that the sector grew by 25 per cent in the first six months of 2019, adding $10.1 billion in funds under management (FUM) and up from $2.7 billion in the first half of 2018.
Trading volume increased by 11 per cent compared to the second half of 2018.
Last week, ETF assets in Australia were forecast to reach $100 billion by 2022 by a Stockspot report, which would double the sector’s size during the next three years.
BetaShares chief executive Alex Vynokur said the pace of growth of the Australian ETF industry is well on the rise.
“Over the past few years, ETFs have become a popular choice for Australian investors to diversify their portfolios, which were traditionally very skewed towards local equities,” Mr Vynokur said.
“Australian investors now have access to a wide range of ETFs, providing them with the tools to invest into all major asset classes, sectors and regions. At $50 billion, we believe that the Australian ETF industry is now well and truly ‘on the map’.”
BetaShares reported a shift in investors increasing allocations to fixed income ETFs, in particular, Australian bonds, with the category taking in almost $1.4 billion of new money.
As at June 2019, the review saw fixed income had overtaken international equities to become the number one category for net inflows, with the second category receiving $1.3 billion.
Passive index products posted the vast majority (82 per cent) of inflows for the half, while active and smart beta exposures each received 9 per cent share of flows.
At an issuer level, the review noted, the inflows into ETFs have been more concentrated than in 2018, with the two largest issuers for flows, Vanguard and BetaShares, receiving around 60 per cent of the industry net inflows combined.
Product development was slightly muted in contrast to the year before, with there only being seven new products launched compared to 10 new products in the first half of 2018.
“Despite the slow launch of new products so far, we do expect this to pick up in the second half of the year,” Mr Vynokur said.
“Given the fast growth of the Australian ETF industry in the first half, we are also upgrading our industry FUM by the end of 2019 from $50-55 billion – which we anticipated at the beginning of the year – to a range of $55-$60 billion.”
The ETF sector grew by $2.25 billion, or 4.6 per cent in June over the previous month, which BetaShares noted as the second highest monthly growth of all time. New net money accounted for $821.7 million or 36 per cent of the surge in June.
Trading value decreased by 7 per cent month-on-month after May’s record month of trading, although it ended up being the second highest month on record for trading value.
Three funds were launched during the month.
Sarah Simpkins is a journalist at Momentum Media, reporting primarily on banking, financial services and wealth.
Prior to joining the team in 2018, Sarah worked in trade media and produced stories for a current affairs program on community radio.
You can contact her on [email protected].