Global equity ETFs claw back in favour

For the first time in the calendar year, there have been strong net inflows into international equity exchange-traded funds (ETFs) as investors seek international growth exposures.  

At some $497 million, this was the “first meaningful monthly inflow” this year, according to Betashares.

This included the Barrow Hanley Global Share Fund (Managed Fund) which gained $147 million, Talaria Global Equity Fund (Managed Fund) which gained $51 million, and Vanguard MSCI Index International Shares ETF which gained $70 million. 

Betashares noted this was an improvement on the first half of the 2023 calendar year when they had been “eschewed by investors given concerns over the rate environment and a looming US recession and has received outflows as a category in this half”. 

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It was not a universal inflow across all global ETFs though during July, with Magellan Global (Open) (Managed Fund) and Vanguard Global Value Equity Active ETF (Managed Fund) both seeing the largest outflows during the month at $151 million and $181 million, respectively. 

Flows into international equities were far higher than those into Australian equity ETFs which grew by $74 million during the month. 

Australian fixed income ETFs saw the highest inflows overall at $557 million, having been the top asset class in the first half of the year at $2.5 billion.

This included iShares Core Composite Bond ETF ($144 million), Betashares Legg Mason Australian Bond Fund (Managed Fund) which gained $112 million, and Vanguard Australian Fixed Interest Index ETF which saw inflows of $50 million.

In comparison, outflows were limited to some selling in cash ETFs (-$129 million) together with what appeared to be profit-taking related selling in oil (-$17.6 million). 

In terms of performance, a cryptocurrency ETF took the top spot during the month, having already returned 121 per cent during H1.

“Betashares Crypto Innovators ETF was the number one performing fund this month returning ~22 per cent for the month as investors continued their enthusiasm for crypto and bitcoin related exposures,” Ilan Israelstam, co-founder and chief commercial officer of Betashares, stated.

“We also saw strong performance in crude oil via our Crude Oil Index ETF which returned ~16 per cent for the month.”

Other top performing products were the iShares FTSE China Large-Cap ETF (10.5 per cent), Global X Copper Miners ETF (10.1 per cent), and Betashares Online Retail and E-Commerce ETF (10 per cent).

“Robust investor flows combined with market appreciation pushed the Australian ETF industry to a new all-time high in assets under management as at the end of July, marking a strong start to the second half of the year,” Israelstam said.