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ETF sector hits $117bn, but low-cost strategy continues to dominate
Exchange-traded funds (ETFs) are still as popular as ever, especially among retail investors who continue to drive the sector to record highs.
According to Morningstar’s ETF Year-End Review 2021, Australian ETFs hit a dizzying high after recording a massive 23.9% increase in total assets, to $117 billion. It was led by strong-performing Australian equities pumping in some $20.8 billion into local equity ETFs. On the previous year, net inflows for this asset class were up 12.1%. Compared to 2020, however, Australian equity ETFs’ net flow grew by 50.4%.
Here are the top 5 ETF providers in Australia
Breaking it all down, Vanguard still has the lion’s share of ETF funds under management, however iShares and Betashares are trailing closely behind. Looking at the table above, however, it was Betashares and VanEck that saw the highest growth in FUM during 2021, with VanEck recording a 57.4 per cent increase in FUM and Betashares posting a 54.5 per cent increase. A lot of this can be attributed to the new products that both Betashares and VanEck have been constantly releasing to cater to investor demand.
BetaShares and VanEck continued to tap this niche area via a number of successful launches in 2021. Morningstar says, “the popular areas for growth have been ESG and disruptive technologies. Four of the strategies introduced last year have crossed $100 million in assets, notably the BetaShares crypto product, which was only launched in November. The sustainable and active ETF launch pipeline remained strong as 12 new ETFs (sustainable and active) were introduced to the market in 2021.”
Vanguard retained its leadership position, recording the highest net inflows in 2021 of 32.7% of the total ETF FUM in Australia, followed by iShares with 21.7% and BetaShares 19.2%. Totaling net inflow growth of 77.7% , the three main ETF providers Vanguard, BetaShares and iShares continue to dominate the space.
Morningstar says, “The global trend of ESG-focused investing continues to be embraced locally. This enthusiasm was reflected in the doubling of 2020’s net inflows, with $2.8 billion going into the sustainable ETF cohort in 2021. This was 13.5% of all net flows into the Australia-domiciled ETFs. BetaShares and Vanguard were at the forefront of investors’ surging demand for ESG strategies. BetaShares Global Sustainability Leaders ETF, BetaShares Australian Sustainability Leaders ETF, and Vanguard Ethically Consious International Shares ETF received the highest inflows among the sustainable ETFs currently in the market.”
