The Australian exchange traded fund (ETF) industry has extended its growth by 44% over the course of 2021, aided by record inflows and strong market conditions, according to BetaShares.
BetaShares’ end of year review showed industry funds under management (FUM), which started 2021 at $95 billion, ended the year at an all-time high of $136.9 billion
BetaShares chief commercial officer, Ilan Israelstam, said: “After two successive years of less than 50% growth in 2019 and 2020, it is remarkable that the industry managed to grow by 44% over the course of 2021”.
The change in total industry size for the year was $42 billion which is the largest change in value on record, $9 billion more than 2020.
BetaShares said the growth was assisted by market appreciation and $23.2 billion in inflows, marking the highest net flows on record jumping 13% from the year before.
The ETF provider said the growth in flows was mirrored by the rapid rise in the number of Australian ETF investors, with 1.7 million Australians investing in ETFs, up 33% from 2020.
Product development activity eased slightly with 33 funds launched in 2021, 13 of which were active ETFS and almost all via the creation of existing unlisted funds.
“We are predicting a record year of new product launches in 2022, as the industry continues to evolve and mature,” Israelstam said.
Passive products represented most flows, making up 92%.
“Notably, and notwithstanding the large number of Active ETF product launches, we actually saw a larger than ever proportion of the flows into passive ETFs, with the active ETF sector dropping its share of flows from 10% in 2020 to 8% in 2021,” Israelstam said.
“This illustrates that notwithstanding the high levels of product launch activity, there is still some way to go to for mainstream adoption of Active ETFs in the industry, and a continued (and rising) preference by ETF investors for passive products.”
Geared US Equities took the number one spot for best performance over the course of the year, with BetaShares GGUS fund returning 66%.
Israelstam said BetaShares believed the industry would continue to grow strongly but it doubted it would be as assisted by the market as it was in 2020.
“We forecast total industry FUM at end 2022 to be in the range of $180 billion to $190 billion,” Israelstam said.
