Australian ETP market to reach $200bn by 2025
Despite market volatility, some 42 exchange traded products (ETPs) were launched in the last 12 months, and the ETP industry is expected to reach a record $200 billion in the next three years, according to Global X.
The firm expected at least 350 products to be listed on the Australian Securities Exchange (ASX) and Cboe by 2025.
Kanish Chugh, Global X head of distribution, said ETP flows and market size would continue to grow this year as investors rationalised their investments and made the most of a wide range of exchange traded funds (ETFs) listed on the ASX.
He expected the industry could reach $200 billion in the next three years, echoing comments by VanEck that the market could reach $150 billion by the end of 2023.
“There are still gaps in the market for providers to list innovative investment solutions, and ETFs are the most convenient and cost-effective vehicles for Australian investors to build their portfolios,” Chugh said.
ETFs currently made up around 90 per cent of the Australian ETP market.
In the last 12 months, some 42 new ETPs had been launched and new asset classes had been added to the market, including cryptocurrency and carbon credit ETFs.
“There were also a significant number of environmentally conscious and sustainability-focused ETFs launched, highlighting the shift in the ETF market to values-based investing,” said Chugh.
“Australia was also the first nation in the Asia Pacific to list cryptocurrency ETFs, which highlights how local investors and providers are striving to innovate and leading the way in ETF product development and meeting investor demand.”
Numerous investors also turned to Australian equity ETFs to build their portfolios as Australian shares outperformed global markets, held up especially by resources shares, including gold miners. Other investors sought exposure to sustainable themes such as battery technology and lithium.
Chugh predicted more fund managers, both active and passive, would enter the ETP market in 2023.
“Given rising competition, investors need to look under the hood of ETFs to get a real understanding of the assets in which they are investing.
“On the provider side, it will become more important for ETP providers to deliver greater value to investors with a relevant point of difference,” he said.
AUTHOR
Rhea Nath
Recommended for you
Platinum Asset Management has put its two closed-end funds under strategic review in a bid to reduce the share price discount to pre-tax NTA and maximise shareholder value.
In the latest Meet the Manager profile, Money Management speaks with Michael Skinner, founder and managing director at Blackwattle Investment Partners.
Perpetual has seen AUM rise 6 per cent in the last quarter but the departure of a longstanding JOHCM fund manager led to outflows of $2.2 billion from his strategy.
Global fixed income fund Bentham Global Opportunities has been added to several major platforms, enabling it to be accessed more easily by financial advisers.
Add new comment