The local exchange-traded fund (ETF) industry reached a record $226 billion in funds under management at the end of September, VanEck’s latest Industry Pulse report has revealed.
This was up 3 per cent from August 2024 and up 48 per cent from September 2023.
Interestingly, China’s equity market benchmark surged 21.1 per cent for the month in the space of just a few days, according to the fund manager, marking its strongest move since 2014.
“Performance-wise, Chinese equities were the Cinderella story for September, going from one of the worst-performing equity markets to finishing the month on a high,” VanEck said.
“This performance was reflected in VanEck’s two China ETFs, which experienced their biggest five-day volumes since listing.”
Namely, the VanEck China New Economy ETF (CNEW) returned 21.4 per cent over September, while the iShares China Large-Cap ETF (IZZ) came in close behind at 20.1 per cent.
Moreover, the VanEck FTSE China A50 ETF (CETF) delivered an 18.4 per cent return over the period.
Looking at flows, which totalled $2.7 billion over the month, the firm noted that international equities remained a standout, making up more than half of all net flows ($1.6 billion).
“Australian equity had a muted month, with the largest market cap passive ETF seeing uncharacteristic outflow,” VanEck said, with Australian equity witnessing $318 million in investor dollars.
“Fixed income experienced a wide dispersion of flows as investors sold out of short duration floating rate note strategies to longer maturity Australian government bond strategies or the broader benchmark.”
Meanwhile, the Australian ETF market saw five new products listed in September and one delist.
It was only in July that the market surpassed $200 billion in size after kicking off the year at around $180 billion under management.
On the back of this growth, fellow ETF provider Global X suspects that Australia’s ETF industry is on track to hit $1 trillion by 2030.
“It took nearly 20 years to reach the initial $100 billion, while the next $100 billion was achieved in just over three years,” Marc Jocum, product and investment strategist at Global X, said in August.
“This exponential growth encapsulates Australian investors’ keen interest in using ETFs for their portfolios due to their low cost, simplicity, liquidity and tax efficiency.”
