VanEck has predicted that the assets under management of the Australian ETF industry will hit $150 billion next year, up from around $136 billion as of the end of November this year.
According to VanEck’s Asia Pacific CEO and managing director, Arian Neiron, the bear market has failed to deter ETF investors, with the local ETF market now on track to become larger than ever.
“Investors are increasingly turning to the cost-effective investment vehicles which provide greater access to a diversified range of investments,” he said.
“The ETF industry is only going to continue to grow, with the global ETF industry forecast to grow to over $20 trillion by 2026.”
The 2022 VanEck Australian Investor survey found that one in two investors plans to increase their allocations to ETFs or make their first ETF investment over the next six months.
In 2023, 70 per cent are planning to invest in Australian shares, and nearly 50 per cent are planning to invest in international shares, while only 13 per cent do not plan to invest at all.
ETFs ranked as the most popular investment vehicle by far for the survey’s respondents. Only 5 per cent highlighted unlisted or actively managed funds or LICs as their preferred investment.
Around one in three investors was found to have a self-managed super fund (SMSF), with ETFs featuring in 92 per cent of SMSF portfolios. Additionally, almost 50 per cent of those surveyed intend to increase their SMSF allocation to ETFs in 2023.
Meanwhile, VanEck reported that around two-thirds of the respondents felt confident about their portfolios in the medium term of one to five years, and more than 80 per cent expressed confidence over a long-term time horizon of five-plus years.
“The survey confirms many investors will be seeking out buying opportunities next year as compelling valuations present themselves,” said Mr Neiron.
“A slowing economy and falling inflation should see ‘quality’ companies with strong balance sheets, stable earnings and high returns on equity come to the fore. These quality characteristics have outperformed before, and 2023 may be their time to shine again.”
VanEck suggested that 2023 will be a defining year for investors, with a predicted 25 basis point increase to the cash rate at the Reserve Bank’s first meeting in February next year before a terminal rate of 3.85 per cent is reached in mid-2023.
“While Australia is better placed than many other countries, with a lower inflation rate and wage growth not as strong as the US, we see the Australian share market outperforming the US next year, with investors gravitating toward sectors including gold, and sectors that can provide defence against inflation, such as infrastructure and fixed income, where yields have rallied with the inflationary environment,” Mr Neiron said.
