Australian ETPs market continues to grow
Australia's strategic beta exchange-traded products (ETPs) market has continued to grow both its assets and number of products, with four new product launches as of the end of June, according to Morningstar.
The local strategic beta ETP market rose to 20.9 per cent over the year, to US$1.4 billion, while at the same time, the overall Australian ETP market grew 18.2 per cent year-on-year, with strategic beta assets accounting for 8.4 per cent.
According to Morningstar's report titled "Global Guide to Strategic Beta Exchange-Traded Products", the local market was dominated by domestic dividend equity strategies, however there was also a growing number of international products.
With four new product launches over the 12 months to June, there were three international equity vehicles and included BetaShares WisdomTree Europe ETF currency hedged HEUR, BetaShares WisdomTree Japan ETF currency hedged HJPN and SPDR MSCI world quality mix fund QMIX.
Also, the study stressed that the market saw some fee compression among Australian strategic beta ETPs which resulted in fee cuts and the new market entrants to be priced at the middle to upper end and with the majority of the new products being global rather than domestic equity.
According to Morningstar, the asset growth in strategic beta ETPs was driven mostly by new launches, new flows and the entrance of new players while the pace of new product launches, especially in the United States, accelerated to record levels as a result of a combination of new entrants and strategy proliferation.
Globally, strategic beta ETP collectives assets in the Asia-Pacific region climbed 48 per cent year-on-year to US$10.5 billion with 58 new strategic beta ETPs hitting the European market over the past year.
Morningstar Australasia manager research associate director, passives, Alex Prineas, said: "Australian strategic beta exchange-traded products notched up another year of healthy growth.
"Australia has the second-highest amount of strategic beta ETP assets in the Asia-Pacific region after Japan. While the local sector continues to be dominated by domestic dividend equity strategies, a growing number of international products are enabling Australian investors to diversify their portfolios."
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