Van Eck dominates smart ETPs with 48.7% market share

Van Eck has retained its Australian market leadership in smart beta exchange traded products (ETPs) across the board, according to a new review released by research and ratings house, Morningstar.

As of December 2022, the issuer [Van Eck] had a 48.7% market share in strategic-beta ETPs with $4.4 billion in AUM across 13 products,” the Morningstar analysis said. “The firm was also the most preferred among the investors for strategic-beta ETP investing in 2022, amassing $772 million, the highest among all strategic-beta ETP providers.”

The analysis said that at the end of 2022, VanEck MSCI International Quality ETF QUAL was the largest strategic-beta ETP in the Australian market, with $2.0 billion in assets. It was followed closely by Vanguard Australian Shares High Yield ETF VHY ($1.8 billion) and VanEck Australian Equal Weight ETF MVW ($1.2 billion).

“These top three largest funds collectively accounted for 54.4% of all strategic-beta ETP assets in Australia. Based on their equal-weighted average fees, strategic-beta ETPs are priced at a modest premium to their market-cap-weighted counterparts in Australia,” Morningstar said.

“However, a caveat here is the inclusion of a few ETPs in the strategic-beta cohort with fees comparable to the active managers. For example, VanEck Vectors China New Economy ETF CNEW charges an annual fee of 0.95%. Australian investors have generally leaned toward less pricey options across all asset class groupings. The fact that asset-weighted average costs are lower than equal-weighted fees supports this point.”

Following multiple years of steady growth, the broad Australian ETP market had a muted year in 2022. AUM declined by 10.1% to $89.4 billion at the end of 2022 due to the market downturn which also reflecting a 6.7% depreciation of the Australian dollar against the U.S. dollar. Reeling under worsening macroeconomic conditions, equity markets declined worldwide last year (the S&P ASX 200 Index fell 7.7%, while the MSCI ACWI ex Australia tumbled 18.6%), weighing on investor sentiment as the net inflows into locally listed ETPs slowed to $9.8 billion, showing a 39.7% decline relative to 2021.