Australian ETF industry exceeds $300b milestone

The Australian exchange traded fund (ETF) industry has surged ahead of schedule and surpassed $300 billion in funds under management (FUM) as of the end of last month, according to Betashares’ latest monthly review.

Initially expected to reach the milestone closer to the end of the year, the industry recorded an all-time high of $309.3 billion fueled by strong investor appetite for international equities, Australian equities and fixed income.

According to Betashares’ assessment of Australian Securities Exchange (ASX) and Cboe data, ETF assets under management (AUM) rose by $63 billion from the beginning of the year and net inflows have hit $37 billion so far this year.

Across asset classes net inflows were supported by strong investor sentiment given ongoing market conditions, with international equities ($14.9 billion), Australian equities ($9.2 billion) and fixed income ($7.9 billion) leading the pack and followed by gold ($1.3 billion) and cryptocurrencies ($410 million).

“The Australian ETF industry continues to go from strength to strength as more investors and financial advisers embrace ETFs for their inherent attributes of simple access, transparency, and cost-effectiveness,” Betashares chief executive, Alex Vynokur, said.

“We’re witnessing a structural shift in how Australians invest, with ETFs increasingly becoming the vehicle of choice for building diversified portfolios.

“Reaching the $300 billion milestone is another clear indicator of the growing role that ETFs are playing in the portfolios of investors from all walks of life.

“Since crossing the $200 billion mark just over a year ago, the pace of growth has accelerated, reflecting the increasing trust and reliance investors are placing in ETFs as long-term wealth-building tools.”

Analysis also reveals that the Australian ETF industry is now more than 400 strong, as fund managers continue to re-package their flagship strategies into ETF form and reach an even broader investor audience.

“Despite this strong growth, ETFs still represent only around 6 per cent of the broader managed funds industry in Australia, highlighting the significant headroom that remains for further adoption.

“We’re proud to be a significant contributor to the ongoing growth of the Australian ETF industry as we provide investors with access to institutional grade investment strategies in our growing range of wealth creation solutions.”

Betashares has also rejigged its industry FUM prediction up to $320 billion by the end of the year and $500 billion by the end of 2028, bring forward its previous forecast by two years.