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International equities ETF growth trumps domestic peers

3 minute read

International equities exchange-traded funds (ETFs) received the highest inflows in January as investors returned to the asset class.

The Australian ETF industry saw growth of 3.2 per cent in January – equivalent to $5.6 billion – reaching a new record high of $183.1 billion in funds under management (FUM), driven by asset value appreciation and investor net inflows.

According to Betashares, net inflows of $1.7 billion represented approximately 30 per cent of the industry’s monthly growth, which is “a robust result in what is typically the quietest month of the year”.

“In a continuation of what we observed in the final month of 2023, investors returned to equities with international and Australian equities ETFs being the No. 1 and No. 2 most-bought categories, respectively,” observed Ilan Israelstam, Betashares chief commercial officer.

International equities received $985.4 million of net inflows, while Australian equities saw net inflows of $717.5 million.

Fixed income was the next most popular category with $67 million, followed by cash at $56 million.

Interestingly, fixed income ETFs saw the most inflows in 2023 at $5.3 billion – the first time that fixed income took the top spot since Betashares started conducting its annual reports.

Over the last 12 months, the industry has expanded by 32.2 per cent, or $44.6 billion.

“Unsurprisingly, given the time of year, there were no new products launched and no closures,” Mr Israelstam added.

Looking at the top-performing products for January, two were uranium-focused funds. The Betashares Global Uranium ETF came in top with gains of 16.4 per cent, followed by the Global X Uranium ETF at 13.3 per cent, and the Betashares Japan ETF - Currency Hedged at 9.3 per cent.

Earlier this week, Trackinsight’s 2024 Global ETF Survey, conducted in partnership with JP Morgan Asset Management and State Street, found that a surge in uranium prices bodes well for both the industry and related ETFs.

The rise of uranium is tied to the resurgent interest in nuclear power, combined with recent supply shortages.

Speaking to InvestorDaily back in October last year, AMP Capital chief economist Shane Oliver said he is not surprised investors are increasing their portfolio exposure to uranium.

“I think that technology has come a long way from where it was in the 1960s and ’70s, and that’s why investors probably have to look at it,” he said.

However, at the time, Mr Oliver said he does not expect the nuclear energy case to make inroads in Australia, given entrenched fears about the safety risks.

“In terms of whether it’s going to happen in Australia, I’d be a little bit sceptical. It’s possible, but I think it’s more unlikely than likely,” he said.

“…It’s still seen as risky, it seems to create fear, which makes me think it probably won’t happen in Australia.

“…It polarises the community to such a great degree in Australia, it’s hard to see us getting over that.”