VanEck has named international equity exchange-traded funds (ETFs) as “the clear frontrunner in 2024”.
According to the firm’s latest ETF Industry Pulse, the Australian ETF industry recorded total net flows of $35 billion in the 12 months to 31 December 2024.
The result surpassed the previous annual record of $23.2 billion in net flows from 2021.
In particular, international equity ETFs were cited as a key driver of growth in 2024, as they accounted for more than 40 per cent of the total net flows at $15 billion.
“Industry growth has been fuelled by the popularity of international equities ETFs, which saw unprecedented net flows of more than $15 billion for the year – more than double the flows into Australian equities,” VanEck stated.
Among the top international equity ETFs were Vanguard MSCI Index International Shares ($1.9 billion), VanEck MSCI International Quality ETF ($1.5 billion), and VanEck MSCI International Small Companies Quality ETF ($912 million).
Meanwhile, some $7.6 billion in net flows were recorded for Australian equities ETFs, while Australian fixed income came in third with net flows of $4.5 billion. This included the Vanguard Australian Shares Index ETF which saw the highest flows overall during the year at $2.3 billion.
“Compared to last year, where flows to international equities ETFs came in third after fixed income and Australian equities, international equities ETFs have been the clear frontrunner in 2024.”
Research from the VanEck Australian Investor Survey 2024, which canvassed over 3,500 individual investors, discovered that more Australians than ever are eyeing out overseas investments to expand their portfolio.
Over three-quarters (77 per cent) of Australian investors are planning to invest in international equity ETFs in the next 12 months, representing a 27 per cent rise compared to last year.
Meanwhile, approximately 70 per cent are looking at their home soil for ETF investment opportunities. This is the first time that international equities have overtaken Australian equities, VanEck noted.
The ETF Industry Pulse also found the industry market cap reached a new high of $247 billion in total funds under management for 2024, signifying a year-on-year growth of 38 per cent.
“Looking ahead, the growth trajectory for ETFs is expected to continue unabated, with the market cap likely to exceed $250 billion in the first quarter and $300 billion by the end of the year.”
Some 64 new ETFs were launched last year on the ASX and Cboe exchanges, meaning the total number of products in Australia has exceeded 400.
Across the 12-month period, the Global X 21Shares Bitcoin ETF (EBTC) generated the highest returns at 146 per cent. This was followed by the Global X FANG+ ETF (FANG) at 67 per cent, and the Munro Climate Change Leaders Fund (MCCL) at 65.7 per cent.
