Aussie ETF market hits a record $200 billion
The Australian ETF industry has rocketed past $200 billion in assets under management, with a prominent fund manager forecasting it could grow to $500 billion by 2030.
Exchange traded fund market capitalisation jumped by 15.7% in the first half of 2024 to $205.3 billion.
ETF flows ($11 billion) were also strong, more than double the $4.8 billion of net flows received in the first half of 2023.
At the same time, Morningstar data shows that local unlisted funds had outflows of $3.8 billion over the same period.
International and Australian equities were the preferred asset classes for investors, with net inflows of $5.6 billion and $3.3 billion, respectively.
Fixed income, which led last year, came in third with $1.8 billion in net inflows.
"There's been a shift so far since the end of 2023 as investors and their financial advisers return to international and Australian equities as market sentiment improves," says Alex Vynokur, Betashares chief executive.
"We expect this trend to continue to drive flows into these two asset classes, alongside fixed income."
Meanwhile, product development activity was high this half, with 36 new products launched, compared to 22 in the first half of 2023. This included four new issuers, all active ETF providers.
Nevertheless, active ETFs saw cumulative net outflows, mainly due to large withdrawals from one Magellan ETF.
"The Australian ETF industry continues to expand as the growing range of ETFs is allowing investors and their financial advisers to use the convenient and cost-effective investment vehicle across more parts of their portfolio, while the shift away from typically higher cost unlisted funds to ETFs is helping to reduce costs across investor portfolios," Vynokur says.
According to a new report released by ETF provider Global X, cryptocurrency ETFs, including those for Bitcoin and Ethereum, have been the top performers over the past year, driven by risk-on sentiment pushing prices higher.
"Global demand for bitcoin ETFs has surged, with over $30 billion in net inflows since the debut of US spot bitcoin ETFs. Companies exposed to artificial intelligence, especially in the semiconductor sector, have also shown strong performance."
Conversely, Global X noted that renewable energy ETFs have continued their weak performance into 2024, making them the worst performers over the past year.
"Despite the ongoing focus on net-zero targets, companies in this sector have faced challenges from higher borrowing costs and inflationary pressures.
"Inverse ETFs also suffered, losing over a third of their value in the past 12 months due to the strong rise in markets reaching all-time highs."
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