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Market volatility tugs at Australian ETFs despite robust inflows

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Strong inflows failed to offset a decline in asset values during September, resulting in a fall in funds under management for the local ETF industry.

The Australian ETF industry has suffered its first monthly fall in funds under management (FUM) so far this year as a result of falling global share markets in September.

Industry FUM fell by 2 per cent or $3.1 billion to end the month at $152.9 billion, according to the latest Australian ETF review from Betashares. The firm indicated that strong net inflows during the month had been overshadowed by a decline in asset values.

In fact, inflows were reported to have reached their second highest level so far this year at $1.7 billion, eclipsed only by the $2.2 billion of inflows recorded in August.

“For only the second time in the last 12 months, we saw a return to meaningful inflows in the international equities ETF segment, which was the highest category for new money ($583 million),” Betashares said.

“Australian equities also had strong inflows ($508 million), and it appears as though ETF investors are making a return to equity investing after focusing heavily on fixed income exposures for the majority of the year to date.”

Fixed income ranked as the third most popular ETF category with inflows of $475 million, distantly followed by cash ($78 million) and multi-asset ($43 million).

“Like last month, there were very little outflows at a category or sub-category level this month, with ETF investors largely choosing to hold or add to their positions, in aggregate,” Betashares added.

The Australian ETF review indicated that ASX ETF trading value eased from the 15-month high seen in August, falling by approximately 20 per cent to $9 billion.

Nine new ETFs were launched on ASX and Cboe during September, including new products from Betashares, VanEck, Global X, iShares, JP Morgan and Coolabah Capital. A total of 350 exchange traded products were trading on the two exchanges.

For the second month in a row, the Betashares Global Uranium ETF (URNM) and the Global X Uranium ETF (ATOM) were the two top performing products. URNM surged by 24.3 per cent over the month, while ATOM gained 14.5 per cent.

These were followed by the Global X Ultra Short Nasdaq 100 Hedge Fund (SNAS), which rose by 13.6 per cent, and the Betashares US Equities Strong Bear Currency Hedged (Hedge Fund) (BBUS), which increased by 12.9 per cent.

Meanwhile, a shift was observed in the rankings of ETFs by market capitalisation during the month.

The Vanguard MSCI Index International Shares ETF (VGS), which has a market cap of $6.3 billion, moved up to second place, while the Magellan Global Fund (Open Class) (Managed Fund) (MGOC), with a market cap of $6.1 billion, moved down to third. The Vanguard Australian Shares Index ETF remains firmly in first place with a market cap of $12.7 billion.

While the growth of the Australian ETF industry came to a halt in September, Betashares reported that industry FUM is still up 20.1 per cent or $26.1 billion over the past 12 months.

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.