The amount of exchange traded funds (ETF) now on offer in Australia has reached past 200, according to data from ETF Securities Australian ETF Landscape for Q4 2019.
Kanish Chugh, ETF Securities co-head of sales, said there was still gaps in the market for ETF offerings.
“If you consider the make-up of a standard portfolio you would expect 40-50% of this to be made up of fixed income,” Chugh said.
“Looking at the assets in Australian ETFs, currently the majority sits in equity funds, we would expect to see a growing adoption of people using ETFs to access fixed income.”
“Additionally there is a global move to environmental, social and governance (ESG) products – expect to see a growing list of ESG options for investors.”
Performance of Australian broad-based equity ETFs over three years to 31 October 2019
For Australian equities, there are eight in Australian broad-based, nine in Australian small-mid cap, 11 in Australian high yield, nine in Australian sectors, and 12 in Australian strategy.
For global ETFs, 11 in global broad-based, 16 in global sectors, five in global infrastructure and 25 in global strategy.
Performance of Global broad-based equity over three years to 31 October 2019
In different geographic markets, there are 11 in US equities, six in Europe equities, 13 in Asia Pacific and eight in emerging markets.
There are five in leveraged/short, five in cash, seven for commodities, six in foreign exchange and seven in mixed allocation.
For fixed income there are 26 in total, which is broken to 18 in Australian fixed income and eight for global fixed income.
Looking at the growth from 2018 to 2019, the categories that saw the biggest move were outside of Australia.
“The biggest area of growth is in the ‘global strategy’ category illustrating how products are becoming much more tactical as providers look to provide an innovative exposure,” Chugh said.
“There has also been a growth in the emerging markets space with four new funds added in this area, including two India exposures.”
Change in product offerings per category from Q4 2018 to Q4 2019
|
Fund |
Q4 2018 |
Q4 2019 |
Change |
|
Australia Broad Based |
9 |
8 |
-1 |
|
Australia High Yield |
12 |
11 |
-1 |
|
Australia Strategy |
10 |
12 |
2 |
|
Global Sectors |
15 |
16 |
1 |
|
Global Infrastructure |
4 |
5 |
1 |
|
Global Strategy |
17 |
25 |
8 |
|
Equities – Europe |
5 |
6 |
1 |
|
Equities – Asia Pacific |
12 |
13 |
1 |
|
Equities – Emerging Market |
4 |
8 |
4 |
|
Cash – Australia |
4 |
5 |
1 |
|
Fixed Income – Australia |
16 |
18 |
2 |
|
Fixed Income – Global |
7 |
8 |
1 |
|
Mixed Allocation |
6 |
7 |
1 |
Source: ETF Securities
As of 31 October, 2019, the market size of ETFs in Australia had grown to $56.92 billion, up from $40.41 billion at the start of the year.
As for 2020, Chugh said the direction would likely be interest in the ethical space, as well as funds flowing out of higher fee active funds into passive ETF alternatives – a global phenomenon Australia was now following.
Subject to regulatory requirements from the Australian Securities and Investments Commission (ASIC), there was also an expectation of growth in active ETFs.
