ETF industry FUM propels forward

Exchange traded funds (ETFs) have continued to prove themselves as an alternative device for investors to survive market volatility and earn returns after hitting a new record in funds under management (FUM) in February.

According to BetaShares’ Australian ETF Review for February 2023 found the industry’s FUM ended the month at $139.7 billion, recording a positive yet slow month-on-month growth rate of 0.9 per cent.

The report also said the majority of the industry’s increase or approximately 70 per cent could be attributed to net flows of $0.9 billion. Despite volatile market conditions and ongoing declines, the industry has seen a 7.4 per cent or $9.7 billion year-on-year growth in the last 12 months.

As of February, there were 325 ETFs trading on the ASX, with four new products launching throughout the month including three covered call ETFs from Global X and one ‘Global Transition active ETF from Platinum.

“Unlike January, this month we saw considerable interest in broad market Australian equities ETFs ($375m inflows), with investors seemingly taking the view that the ‘lucky country’ remains in a better position economically than other developed global markets,” the report said.

“Fixed income exposures continue to remain popular receiving $370m of net flows.

“It is notable that although inflows remain relatively muted compared to previous years, we are not seeing any major outflows across the industry. The exception to this has been Active ETFs, where ~$300m of outflows have been recorded to date this year.”

Two iShares funds, the Core S&P/ASX 200 ETF and the S&P 500 AUD Hedged ETF saw the highest inflows for the month at $312 million and $124 million respectively, while Magellan’s Global Fund (Open Class) (Managed Fund) continued to see the highest outflows at $239 million.