According to Morningstar, 2022 saw the most ETF launches in the past decade, with 41 new ETFs hitting the market compared with 23 in 2021.
With 13 new active ETFs launched last year, that cohort dominated the landscape, followed closely by environmental, social, and governance (ESG), and disruptive technologies.
BetaShares and Global X had several successful launches in 2022, having “tapped into the trend for specialty and narrowly focused ETFs”.
The BetaShares Australian Composite Bond ETF and Global X US Treasury Bond (Currency Hedged) ETF were the most successful 2022 launches, with $194 million and $158 million in net flows, respectively.
Despite the influx of new ETFs, Morningstar said the ETF market only recorded “tepid growth” last year.
Assets grew by 4.9 per cent to $123.1 billion, primarily attributed to net inflows.
“Reeling under worsening macroeconomic conditions, equity markets declined worldwide (the S&P ASX 200 Index fell 1.1 per cent, while the MSCI ACWI ex Australia tumbled 12.7 per cent) last year, weighing on investor sentiment as the net inflow into locally listed ETFs slowed to $14.5 billion, showing a 34.3 per cent decline relative to 2021,” Morningstar said.
The historical trend of a highly concentrated local ETF industry persisted in 2022, with Vanguard, BetaShares, and iShares remaining at the top in terms of funds under management (FUM).
Namely, as at 31 December 2022, the firms manage a collective three-quarters (72.2 per cent) of the total ETF assets in Australia.
Vanguard continued to lead the market with a 33.5 per cent share, following a 7.3 per cent bump in FUM compared to 2021, while BetaShares and iShares each manage 19.4 per cent of the total ETF FUM in Australia.
Looking at net flows, Vanguard, BetaShares, and VanEck retained their top spots, garnering 87.8 per cent of total net inflows for 2022.
Once again, Vanguard led the way by capturing $6.7 billion in net inflows — equivalent to 47 per cent of the total net inflows into the Australian ETF market.
Looking specifically at the global trend of ESG-focused investing, Morningstar noted that it continues to be embraced locally, albeit at a slower pace than last year. Namely, the ESG ETF cohort attracted $1.42 billion in 2022, marking a 50 per cent decline from 2021.
Vanguard and BetaShares offered the leading ESG strategies, with the duo managing 63.7 per cent of the total assets invested in ESG-focused ETFs in Australia.
