International equities propel ETF flows in Q3
International equity exchange-traded funds (ETFs) continue to encompass the lion’s share of the broader Australian ETF industry’s growth.
According to new data from the ASX and Vanguard, investor cash flows into the Australian ETF market totalled a record $12.7 billion during the September quarter.
The figure is more than double the quarterly flows of Q1 and Q2, with investor flows of $5.3 billion recorded in the March quarter and $5.4 billion in the June quarter.
September’s strong result has helped grow the industry’s overall assets under management (AUM) to a new record high of $219.5 billion, after it surpassed the $200 billion AUM mark in July.
Breaking down the quarterly flows for Q3, $7.7 billion of the flows were generated from international equity ETFs – representing 60 per cent of the total $12.7 billion ETF flows.
In comparison, international equity ETFs saw inflows of $2.7 billion in Q1 and $2.6 billion in Q2.
Meanwhile, $2.1 billion of the total Q3 flows were attributed to Australian equity ETFs. This was compared to inflows of $1.5 billion in both Q1 and Q2.
“The appetite for international equity ETFs by investors is not subsiding and continues to outpace the inflows into Australian equity ETFs and other industry segments,” described Adam DeSanctis, Vanguard head of ETF capital markets for Asia-Pacific.
“For Australian ETF investors, who now number over 2.2 million, the best investment strategy over 2024 and beyond is to focus on long-term investment growth while staying diversified across different markets and segments,” he recommended.
Looking at Australian fixed income ETFs, this segment of the market accelerated over the third quarter of 2024 as investors targeted bond funds to benefit from relatively higher income levels, Vanguard noted.
Approximately $1.5 billion in investor flows were driven into Australian fixed income ETFs in Q3, up from $694 million in the March quarter and $601 million in the June quarter.
According to a recent VanEck survey, an overwhelming 95 per cent of financial advisers indicate they are using ETFs, up from 87 per cent in 2020. This has been driven by evolving portfolio strategies and the superior performance of ETFs compared to active funds.
“The findings from our latest survey demonstrate an overwhelming preference for ETFs by financial professionals,” said Arian Neiron, CEO and managing director at VanEck Asia-Pacific.
“Advisers want more control, better relative performance and greater cost efficiency, and ETFs are uniquely placed to offer all three.”
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Jasmine Siljic
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