The 5 numbers you need to know on Australia's ETF market
31 Oct 18
Exchange-traded funds (ETFs) continue to be one of the fastest-growing segments of the financial services industry. They were the focal point of our Mainstream Breakfast Session in August, at which we spoke with some of Australia's foremost ETF experts about the sector.
Experts from Magellan, Montgomery, Blackrock and BetaShares discussed the growth of ETFs locally and globally, and presented ideas on their potential role in the modern investment portfolio. For some insight, let's refer to our opening speaker - Martin Dinh, Senior Product Manager at the ASX. Here are five figures he brought to the table which show just how big ETFs are.
1) 21 per cent annualised growth globally
Over the last decade or so, the global ETF market has grown by a compound average of 21 per cent every single year. In raw dollar value terms, it's grown from $716 billion USD to $4.8 trillion USD in little more than ten years.
2) $1.2 trillion (USD) capital inflow during 2017
This is how much capital flowed into the ETF market globally in 2017 alone. With relatively minimal market volatility and similarly low interest rates, conditions remain primed for fantastic growth. In fact, Martin cited reports that suggest the ETF market will grow to $7.6 trillion USD by the end of 2020.
Exchange-traded funds have undergone an astronomical rise in Australia.
3) 34 per cent annualised growth in Australia
In the same time period as above, Australia's ETF market has grown 14 times over, with annualised compound growth reaching an astonishing 34 per cent. As Martin explained during his presentation at the Breakfast Session, the ASX believes this growth will continue - and perhaps even accelerate.
4) $6.3 billion AUD moving into equities
Over the last 12 months, the total value of exchange-traded funds under management (FUM) has increased to $39 billion AUD, across some 220 investment products. Of particular note is the growth in Australian and global equities, which rose by $2.3 billion and $4 billion respectively. Martin noted that these are a fantastic way of diversifying a portfolio, and should continue to be a focus for investors.
Fixed income assets are set to take over from equities as the main source of ETF growth.
5) 74 per cent global growth in fixed income assets
While investment in fixed income has only grown by 34 per cent on the ASX, Martin believes this is the next big focal point for small to mid-size institutions. That's because without ETFs, these institutions can find it difficult to access this asset class.
As Australia's ETF market continues to outpace global averages on multiple fronts, we expect to see a lot more interest in these investments products. To remain on the cutting edge of global trends, make sure you're at our next Breakfast Session.
If you’d like to know more about operating an ETF, get in touch with Mainstream Fund Services today.