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Passive ETFs continue to dominate

 — 1 minute read

A wide range of ETFs have seen a surge in popularity as well as performance.

Australian ETF investors have primarily put their money into passive products such as index-tracking funds over the past year while a diverse group of ETFs have ranked as the top performers.

The Vanguard Australian Shares Index ETF (VAS) received $1.92 billion of net new money in 2021 and was ranked as the top ETF by inflows according to a review of the Australian ETF industry by BetaShares.


The Vanguard MSCI Index International Shares ETF (VGS) also surpassed the billion-dollar mark with inflows of $1.27 billion. 

Additionally, $906 million flowed into the Hyperion Global Growth Companies Fund (Managed Fund) (HYGG), $853 million into the Vanguard Diversified High Growth Index ETF (VDHG) and $815 million for the BetaShares NASDAQ 100 ETF (NDQ).

“For the first time since compiling this report, every one of the top 10 funds for flows was an equities exposure,” BetaShares said.

Passive ETFs accounted for 92 per cent of flows while the share for active ETFs dipped from 10 per cent in 2020 to 8 per cent in 2021.

By average daily trading volume, the BetaShares Australian Strong Bear (Hedge Fund) (BBOZ) was on top with $52 million, up from $30 million in 2020.

Next highest was VAS with an average daily trading volume of $50 million, followed by $37 million for the iShares Core S&P/ASX 200 ETF (IOZ).

“After a record year of trading in 2020, it was notable that trading values remained elevated once again in 2021, with the industry clearly now in a new ‘trading level’,” BetaShares said.

The BetaShares Geared US Equity Fund Currency Hedged (Hedge Fund) (GGUS) was the top performing product of the year according to BetaShares, with a return of 66.2 per cent.

The next best performers were the ETFS Ultra Long Nasdaq 100 Hedge Fund (LNAS) which returned 64.7 per cent, and the BetaShares Crude Oil Index ETF-Currency Hedged (Synthetic) (OOO) which returned 57.9 per cent.

Rounding out the top five were the SPDR Dow Jones Global Select Real Estate Fund (DJRE) with a return of 38.6 per cent and the Vanguard Global Value Equity Active ETF (Managed Fund) (VVLU) with a return of 38.2 per cent.

The Magellan Global Fund Open Class (Managed Fund) (MGOC) held on to its position as the top ETF by market capitalisation despite $1.39 billion of outflows for the year.

“Notably, in terms of fund outflows, three of the top 10 funds for outflows were managed by Magellan, whose investment style fell significantly out of favour in 2021,” said BetaShares.

MGOC had a market cap of $14.23 billion as of the end of 2021, while VAS retained its second place ranking with a market cap of $10.12 billion.

The number of ETF investors in Australia is expected to grow from 1.73 million to two million by the end of this year.

Passive ETFs continue to dominate

A wide range of ETFs have seen a surge in popularity as well as performance.

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Jon Bragg

Jon Bragg

Jon Bragg is a journalist for Momentum Media's Investor Daily, nestegg and ifa. He enjoys writing about a wide variety of financial topics and issues and exploring the many implications they have on all aspects of life.

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