ETF inflows almost double 2024 pace

Global X analysis has revealed the Australian ETF market has grown by more than a third in the past year, driven by net inflows, which are almost double the pace of 2024.

As of 31 August, the ETF provider said net inflows were $32.5 billion since the start of the year, which resulted in ETF market growth of 35.9 per cent. Total inflows over the last 12 months stood at $45.8 billion.

August saw the Australian ETF market grow by some $10.2 billion (3.5 per cent) to $299.4 billion across 433 products, including six new ETFs launched in August.

As the market continues this momentum, Global X is predicting a “blockbuster finish” for the year as the strong momentum continues, with potential annual inflows reaching as high as $50 billion. 

“As we approach year-end, the usual seasonality of stronger ETF buying momentum is starting to take shape. August delivered solid gains and the market now looks on track for a blockbuster finish with inflows potentially racing toward the $40-50 billion range – well above last year’s $31 billion milestone,” it said.

Looking at asset class performance, broad-based global shares ETF saw the highest inflows for August by a large majority with $730 million in inflows, followed by broad Australian shares and US global shares, both of which attracted $415 million.

“Rising expectations for US rate cuts kept risk-on sentiment firm, prompting investors to allocate to low-cost, vanilla global share ETFs targeting developed markets. US equity ETFs also drew strong demand, likely bolstered by the same catalysts,” the report said.

However, taking a longer lens saw broad Australian shares rake in the most inflows for the year to date as at 31 August, capturing $4.7 billion over this period. This was closely followed by broad global shares ($4.7 billion), while US global shares saw just $2 billion in inflows over this time.

At the other end of the scale, leveraged Australian shares saw the greatest outflows for August, losing some $42 million, making up the bulk of losses for this asset class over the year to 31 August, with a total reported loss of $47 million. According to Global X, losses in this sector were likely driven by profit-taking after a headline-heavy earning season.