Australian ETF assets forecast to reach A$150bn in 2023
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Exchange traded funds have been the investment vehicle of choice for Australian investors this year amid volatile markets and a challenging global macroeconomic environment, new research from BetaShares shows.
Locally listed ETFs pulled in A$12bn ($8bn) in net inflows from January to October this year, compared with A$25bn in net outflows for managed funds in the same period, according to the 2022 BetaShares Investment Trends ETF report, citing Morningstar data.
The Australian ETF provider expects investor interest to continue to grow in 2023, with net flows projected to exceed A$20bn next year and total industry assets on track to hit A$150bn.
BetaShares also forecasts that by next year, the number of Australian ETF investors is expected to increase by 230,000, bringing the total number of individual investors in such products to more than 2mn in 2023.
Alex Vynokur, chief executive of BetaShares, said ETFs had delivered a “true-to-label investment experience” for a wide range of investors, from large global pension funds to individuals investing for the first time.
“More Australian investors than ever before have turned to ETFs in this volatile year for financial markets,” he said in a company statement.
The report also revealed that 76 per cent of investors aim to boost their allocation of ETFs over the next 12 months, while 32 per cent currently count the products as a core holding in their portfolios. That compares with just 4 per cent who made ETFs a core holding in 2019.
Australian equities were the most popular asset class for ETF investors, followed closely by global equities.
Vynokur said that investors would likely weigh costs and diversification when deciding what to allocate to their portfolios in the near future.
“With these matters front of mind for investors and their financial advisers, we expect further growth in the adoption of ETFs next year,” he said.
A new report from Cerulli Associates found that Australia’s ETF market was “becoming more entrenched and diversified”, though the large number of ETFs now available may mean the priority “will now be consolidation of assets in existing products”.
The global research firm noted in its recent Cerulli Edge: Asian Monthly Product Trends report that there were 304 ETFs listed in Australia as of end-September and that new products were being launched “even in difficult market conditions”.
*Ignites Asia is a news service published by FT Specialist for professionals working in the asset management industry. It covers everything from new product launches to regulations and industry trends. Trials and subscriptions are available at ignitesasia.com.