Australian ETP industry set to grow in 2018
The Australian exchange traded product industry (ETF) is set to grow in 2018 thanks to the momentum generated in 2017, audience of younger investors, an increasing array of fixed income options and a move toward model portfolio using exchange trade funds (ETFs), according to BetaShares.
The company also predicted that active ETFs would grow in popularity, giving investors more opportunity to diversify their portfolios alongside the passive ETF investments.
This would be helped by innovations in the local market which would make it possible for fund managers to offer their active strategies in a convenient exchange-traded form while still protecting their intellectual property.
BetaShares’ managing director, Alex Vynokur said: “While BetaShares remains a strong advocate of passive investing there are a number of asset classes and managers who can add value via active investing.
“We believe the sector has a bright future,” he added.
Also, millennials would be expected to continue to drive growth in ETP industry, as the low cost, simplicity and ease of use of ETFs would provide them with a tailored exposure to investment themes “that matter in their life”.
“For example, ETFs such as the Australian and Global Sustainability Leaders ETFs allow younger investors to invest according to their values, whereas products such as Nasdaq 100 ETF or our Cybersecurity ETF, allow them to be exposed to companies whose products resonate with their daily lives, which van be a strong motivator for investing,” Vynokur said.
According to BetaShares, the growth of the ETF industry in Australia was phenomenal in recent years and was predicted to continue on this strong trajectory in 2018.
The industry size by end of December would likely be $36 billion and the ETF industry was expected to end 2018 at $40 to $45 billion.
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