Sentiment reverses as appetite heats up for global ETFs

15 February 2024
| By Jasmine Siljic |
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International equity exchange-traded funds (ETFs) received the highest inflows in January as investors returned to the asset class.

The Australian ETF industry saw a growth of 3.2 per cent in January equivalent to $5.6 billion reaching a record high of $183.1 billion in funds under management (FUM), driven by asset value appreciation and investor net inflows.

International equities received $985.4 million of net inflows, while Australian equities saw net inflows of $717.5 million.

According to Betashares, overall net inflows of $1.7 billion represented approximately 30 per cent of the industry’s monthly growth, which is “a robust result in what is typically the quietest month of the year”.

“In a continuation of what we observed in the final month of 2023, investors returned to equities with international and Australian equities ETFs being the number one and number two most bought categories respectively,” observed Ilan Israelstam, Betashares’ chief commercial officer.

This compares to stats from Vanguard which showed global equity ETFs saw $2.2 billion in flows during 2023, down 15 per cent on the previous year when flows were $2.5 billion and compared to $5.3 billion into Australian equity ETF products.

Recent research conducted by Betashares and Investment Trends discovered that 53 per cent of ETF investors aim to allocate towards international equities in the next 12 months, up from 42 per cent in 2023. Some 48 per cent plan to do the same for Australian equities, an increase from 41 per cent in the previous year.

“With market sentiment becoming more receptive to growth assets, we’re already starting to see more investors and their financial advisers add to their equities allocations via ETFs, after showing a clear preference for cash and fixed income ETFs during 2023,” Alex Vynokur, Betashares chief executive, previously commented.

Fixed income was the next most popular category with $67 million in January, followed by cash at $56 million.

Interestingly, fixed income ETFs saw the highest inflows in 2023 at $5.3 billion – the first time that fixed income took the top spot since Betashares started conducting its annual reports.

“With investors seeking out a more defensive stance in their asset allocations, together with elevated income/yield opportunities, fixed income ETFs were the number one broad category for inflows in 2023,” Israelstam previously stated.

Over the last 12 months, the industry has expanded by 32.2 per cent, or $44.6 billion.

“Unsurprisingly given the time of year, there were no new products launched and no closures,” Israelstam added.

Looking at the top performing products for January, two were uranium-focused funds. The Betashares Global Uranium ETF came out on top with gains of 16.4 per cent, followed by the Global X Uranium ETF at 13.3 per cent and the Betashares Japan ETF Currency Hedged at 9.3 per cent.
 

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