ETF market bounces back after a two-month decline

14 December 2023
| By Jasmine Siljic |
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The Australian exchange-traded fund (ETF) industry has reached a new record of nearly $170 billion in assets under management (AUM) during November.

Betashares reported a month of rapid growth for the ETF market as assets increased by 13.1 per cent, marking a return to growth after two consecutive months of decline. 

October saw a 1.9 per cent monthly decline of $2.8 billion, while September fell by 2 per cent representing a loss of $3.1 billion.

The total monthly market cap increase of $19.6 billion brought the industry to $169.7 billion in AUM.

According to Ilan Israelstam, Betashares chief commercial officer, the inflows were driven by the “triple threat” of large unlisted-to-active ETF conversions, asset value appreciation and strong net inflows.

“At least $10 billion (50 per cent) of the growth this month came from conversions of existing unlisted active funds into active ETFs as several new issuers joined the industry. Strong asset value appreciation, particularly in global equities exposures, and net inflows contributed the remainder of the growth,” Israelstam explained.

The ETF market also saw more products launched during November 2023 than in any month before with 15 funds entering the market. This included a suite of active ETFs from Dimensional as well as Macquarie Asset Management debuting its first active ETF range.

“It was an exceedingly busy month in product development,” the chief commercial officer observed.

Net inflows of $2.1 billion were recorded in November, equalling the second-highest level of net flows in 2023 to date with $2.2 billion recorded in August. 

Global equities took the stage as the most popular asset class for investors this month, signifying a “meaningful departure from the trend observed throughout 2023”, Israelstam commented.

Fixed income exposures have dominated the ETF space for the majority of the year to date, but it now sits in third place.

International equities saw $955 million in net inflows, or 45 per cent of total net flows for the month. This was underpinned by strong performance and reduced fears over future interest rate hikes.

Australian equities were the next most popular asset class with approximately $600 million in net inflows. Fixed income and cash followed with $408 million and $102 million, respectively.

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