Aussies lift ETFs over $150b milestone

Yasmine Raso

Senior Journalist, Financial Newswire

14 July 2023

Australians’ growing sentiment towards exchange traded funds (ETFs) has led the industry to reach a significant milestone, recording $150 billion in funds under management (FUM) according to Betashares’ Australian ETF Half Year 2023 Review.

Based on the manager’s analysis of data from the Australian Securities Exchange (ASX) and CBOE, the Australian ETF industry received $4.8 billion in net inflows in the year to date, with the size of the industry growing 12.2 per cent to 30 June.

Betashares recorded approximately $1.8 billion of that amount in the half year to 30 June, closely followed by Vanguard at $1.5 billion and iShares at $1.1 billion. These top three ETF providers accounted for approximately 80 per cent of the industry’s flows so far in 2023, despite there being over 40 issuers now in market in Australia.

“ETFs continue to cement their place in the portfolios of Australian investors, as they provide convenient and cost-effective exposure to a growing range of asset classes and investment strategies,” Betashares chief executive, Alex Vynokur, said.

“This trend has pushed ETFs to $150 billion and is expected to facilitate continued growth for the industry for the foreseeable future.

“Over the past 20 years, ETFs have allowed investors to improve outcomes right across their portfolio, whether it’s shifting from higher cost unlisted funds, replacing underperforming active managers or improving diversification beyond the selection of single stocks.

“This trend shows no sign of slowing as investors use ETFs to add exposure to high quality investment options across their portfolio.”

Since the ETF industry launched in Australia in November 2001, it has experienced a compound annual growth rate (CAGR) of 43 per cent per annum. Betashares said the industry could be on track to surpass the $160 billion mark by the end of 2023.

For the month of June, fixed income remained on top as investors continue with caution amid ongoing volatility receiving just under $697 million in net inflows, followed by Australian equities further away at $198 million and cash at $50 million. Outflows recorded by Magellan’s Global Fund (Open Class) kept international equities as the top category outflows.

This comes as $74.6 billion of investor assets are held in international equities, followed by $39 billion in Australian equities and $17.9 billion in fixed income.