Australian-listed exchange-traded funds (ETFs) are on course to hit A$500 billion within the next five years as net flows continue to outpace unlisted counterparts, according to the latest Betashares half-yearly update.
The Australian ETF funds under management (FUM) surpassed A$200 billion for the first time, finishing the first half of 2024 at more than A$205 billion, Betashares says.
“At the end of 2023 (when the industry was $183B) we forecast the industry to end 2024 in excess of $220B – we now forecast the industry to hit $230B by the end of the year, a small increase on last year’s projections,” the report says. “Longer term, we expect ETF industry FUM to increase by 150% to $500 billion in the next five years.”
Net ETF flows hit A$11 billion for the six months to June 30 compared to just A$4.8 billion during the first half of last year.
“Morningstar data shows that Australian unlisted funds have seen outflows of $3.8B over the same period, demonstrating a clear investor preference for exchange traded funds that is consistent with historical trends in Australia and overseas,” the update says.
Betashares recorded about A$3 billion of net inflows in the June half, besting rivals Vanguard and the BlackRock-owned iShares: the three providers accounted for 80 per cent of the total Australian ETF flows in a market now hosting 50 providers.
While many of the new ETFs hitting Australian exchanges have been active fund conversions, the report notes that sector suffered net outflows year-to-date “driven primarily by large flows out of one Magellan [fund]”.
Magellan was a pioneer of dual-class active unlisted and ETF structures but the once A$116 billion manager has seen massive outflows from core global funds over the previous couple of years across all product types.
Despite the outflows, the Magellan Global Fund remains the fourth-largest Australian ETF with more than A$6.2 billion under management: the ASX-listed manager has seen FUM settle at about A$36 billion as at the end of June.
The ETF report, authored by Betashares chief commercial officer Ilan Israelstam, says the total exchange-traded product count across the ASX and CBOE boards now stands at 382.
“Product development activity was elevated this half, with 36 new products launched (compared to 22 for the first half of 2023),” the update says. “This included 4 new issuers entering the market, all of which were Active ETF issuers.”
Betashares has over $100 million in its unlisted portfolio investment entity (PIE) suite in NZ including a $65 million mandate with insurer, AIA, secured late last year.