The local ETF industry saw its strongest quarter on record with $9 billion in cash flows, according to new data from the Australian Securities Exchange (ASX) and Vanguard.
This record boost has pushed the industry above $129 billion in AUM, representing year-on-year growth of 37 per cent.
“It’s encouraging to see such uptake in ETFs,” said Minh Tieu, Vanguard’s head of ETF Capital Markets, Asia-Pacific.
“If this momentum continues and we stay on the same growth trajectory as the last few years, we estimate the Australian ETF industry will reach the next $100 billion of AUM in half the time it took to reach the first $100 billion – which would be a remarkable feat,” Mr Tieu noted.
According to the data, global ETFs continued to be the product of choice for Aussie investors, recording $4.9 billion in inflows in Q3 2021 and $10.9 billion YTD as at September 2021. This indicates almost 50 per cent growth year on year.
“With travel restrictions still in place, Australians are going overseas a little differently this year by pouring into ETFs that target exposure to international markets,” said Mr Tieu.
“Whether it’s because they’re optimistic about the global economic recovery or simply wanting to diversify away from home markets, more funds are flowing into international equity ETFs this year than into Australian equity ETFs.”
Diversified or multi-asset ETFs also continued their strong performance, recording a total of $564 million in the third quarter, compared to $400 million a quarter earlier.
In the fixed income category, domestic bond ETFs (Q3: $410 million) were preferred over international bond ETFs (Q3: $366 million).
Flows into Australian corporate bonds reached $75 million in Q3, significantly surpassing government bonds which recorded a $5 million outflow as low interest rates weigh heavy on the latter.
As for Australian property, it garnered $178.8 million, compared to $97.4 million in the three months prior.
Maja Garaca Djurdjevic
Maja's career in journalism spans well over a decade across finance, business and politics. Now an experienced editor and reporter across all elements of the financial services sector, prior to joining Momentum Media, Maja reported for several established news outlets in Southeast Europe, scrutinising key processes in post-conflict societies.
