Investors shun active ETFs despite launch push
Exchange traded fund (ETF) funds under management beat forecasts to end 2021 with $136.9 billion, although it was bad news for Magellan which saw three ETFs report major outflows.
In the first ETF review of 2022, BetaShares said 2021 ended with ETF funds under management at $136.9 billion, a rise of $42 billion.
Some 33 funds were launched during the year, 13 of which were active ETFs and BetaShares said it predicted “a record year” in 2022 as the industry evolved.
“In terms of 2022, we believe the industry will continue to grow strongly although we doubt it will be assisted by the market as occurred in 2020. We forecast total industry funds under management at end 2022 to be in the range of $180 to $190 billion,” it said.
The rise in funds under management was helped by market appreciation, which contributed 45% of the total annual growth, and net inflows of $23.3 billion thanks to the number of Australian investors into ETFs rising by 33% during the year.
Some 92% of these inflows went into passive products, even though many launches were of active ETF products. Flows into active ETFs dropped from 10% in 2020 to 8% in 2021.
“This illustrates that notwithstanding the high levels of product launch activity, there is still some way to go for mainstream adoption of active ETFs in the industry and a continued and rising preference by ETF investors for passive products,” the report said.
The most popular funds were Vanguard Australian Shares Index, which saw $1.9 billion in inflows, followed by Vanguard MSCI Index International Shares ETF and Hyperion Global Growth Companies.
However, three of the 10 funds seeing the largest outflows were managed by Magellan; Magellan Global Fund (Open Class), Magellan High Conviction Trust and MFG Core Infrastructure. These saw outflows of $1.3 billion, $188 million and $175 million.
AUTHOR
Laura Dew
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