VanEck dominates Australian ETP market

Exchange traded product (ETP) markets may be maturing and slowing elsewhere, but it is still in growth mode in Australia and the broader Asia-Pacific region, according to the latest analysis from research and ratings house, Morningstar.

According to the Morningstar Global Guide to Strategic Beta ETPs, Australia is running second in the regional market to Japan but is showing much stronger growth.

While Japan-domiciled ETPs experienced a sharp slow-down and grew by just 3% in 2021, Australia’s ETP assets grew by 32% to $9 billion.

The analysis said that VanEck retained its spot on top of the leaderboard of Australian strategic-beta ETP providers and that at the end of 2021 it had 50.6% market share with $4.6 billion in assets across 13 products.

The analysis said that based on their equal-weighted average fees, strategic beta ETPS were priced at a modest premium to their more conventional counterparts in Australia.

“A few ETPs in the strategic beta cohort have fees comparable to those charged by active managers,” it said.

According to the Morningstar analysis, the rate of growth in the Asia-Pacific strategic-beta ETP market was in line with that of the broader Asia-Pacific ETP market in 2021. Assets in Asia-Pacific strategic-beta ETPs increased 17% to $53.8 billion.

It said strategic-beta ETPs’ organic growth clocked in at 12% in 2021, slower than 2020’s 17% organic growth rate.

However, the analysis said that, as was the case in 2020, growth was uneven across markets in the region. Also, there were continued signs of market maturation.

“Strategic-beta ETPs’ market-share gains have stalled, inflows have slowed, and the number of new launches was the lowest in eight years,” the analysis said.