Australian ETF market keeps growing
The Australian exchange-traded fund (ETF) market has continued to expand, with the market capitalisation of the sector increasing 23 per cent to $30.7 billion during the year to August, according to Zenith Investment Partners.
Zenith’s ‘2017 Exchange Trade Funds Sector Review’ also found that product diversity continued to increase, with the number of ASX-listed ETFs rising from 145 to 165.
However, the growth would also present new challenges to advisers and their investing clients as the market became more mature, according to Zenith.
Senior investment analyst and author of the Zenith Review, Dugald Higgins, said: “The growth in the number of ETFs has been concentrated at the sophisticated end”.
“With that brings a greater need for understanding precisely how the ETF is constructed, managed and how it intends to meet the expectations of the investor,” he said.
“The market has matured to such an extent that the line between passive and active increasingly blurs, and choosing the right ETF is no longer just a fee-driven proposition.”
The study also found that there was the downward pressure on fees, with ETF fees falling over the last five years from 0.32 per cent to 0.28 per cent per annum, despite the introduction of new ETFs with a higher fee that lift the ‘nominal’ average.
Higgins said this should benefit investors and advisers seeking new low-effective ways to implement portfolio decisions.
Zenith’s review also rated 59 ETFs as approved or higher, with four funds being rated highly recommended.
It only saw one change in the ‘highly recommended’ category, with Magellan Infrastructure Fund being upgraded and now rated alongside two Magellan global equity offerings, as well as Betashares’ Australian High Interest Cash ETF.
AUTHOR
Oksana Patron
Recommended for you
Schroders has appointed a new chief executive as Simon Doyle steps down from the asset manager after 22 years.
Distribution of private credit funds through advised channels to retail investors will be an ASIC priority for 2026 as it releases the results of its thematic fund surveillance and guidance for research houses.
State Street Investment Management has taken a minority stake in private market secondaries manager Coller Capital with the pair set to collaborate on broaden each firm’s reach and drive innovation.
BlackRock Australia plans to launch a Bitcoin ETF later this month, wrapping the firm’s US-listed version which is US$85 billion in size.
