VanEck has predicted that the Australian ETF market will reach $180 billion in assets under management (AUM) by the end of 2024, up from around $150 billion presently.
The bullish forecast for the local ETF industry comes after VanEck’s latest annual investor survey found that close to 60 per cent of Australian investors are planning to increase their allocation to, or make their first investment in, ETFs during the next six months.
In terms of areas of interest, 65 per cent of respondents said they are planning to invest in Australian shares next year and 50 per cent are planning to invest in international shares. Meanwhile, only 14 per cent indicated that they do not plan on investing at all next year.
“These results are almost identical to how investors planned their portfolios the previous year and show appetite has not waned, despite continued uncertainty across markets,” VanEck said.
ETFs were found to be the most popular investment vehicle, with more than half of Australian investors choosing ETFs as their favourite type of investment product.
In excess of 90 per cent of the survey respondents reported that they are invested in at least one ETF and 84 per cent said they would recommend ETFs to other investors.
Only 3 per cent of the investors surveyed chose unlisted/actively managed funds as their favourite type of investment product and less than 2 per cent selected LICs.
“This year has further shown the resilience and popularity of ETFs, as well as the decline in actively managed funds,” commented VanEck Asia-Pacific chief executive officer and managing director Arian Neiron.
“While the economic turbulence of 2023 is likely to continue into 2024, it’s clear that investors are still seeking opportunities and are confident in the long-term benefits of investing in ETFs.”
Dialling down into specific sectors, almost 50 per cent of respondents said they were considering investing in the technology sector next year, and almost 40 per cent are considering investing in healthcare companies.
Technology was the most popular sector, followed by healthcare and then resources, across every age group except for Baby Boomers aged 60 years and older. Resources was the most favoured sector among Boomers, followed by healthcare and technology.
VanEck noted that 74 per cent of respondents indicated they would not be looking to invest in ESG funds in the coming year.
The firm also found that more than 60 per cent of respondents are feeling confident about their portfolios over the medium term of the next one to five years.
Over the longer term, even higher levels of confidence were observed, with more than 80 per cent of investors feeling confident about their portfolios on a five-plus years basis.
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.