The shape of the Aussie ETF landscape in 2H25
Having predicted three ETF trends for Australia at the start of this year, State Street has shared how these are tracking and whether Australia will successfully reach US$30 billion ETF inflows for 2025.
Earlier this year, the firm shared three predictions which were:
- At least three global asset managers with FUM of US$100 billion ($157 billion), will enter the local ETF market.
- Australia will experience ETF inflows in excess of US$30 billion.
- The ETF cryptocurrency market will expand by at least one new coin.
Reflecting on this in August, State Street said one prediction is “on track” while the other two are classed as “not yet”.
With PIMCO and First Sentier both having launched active ETFs into the market, State Street said this first prediction is on track for the year. PIMCO launched four active ETFs in February focused on fixed income and also hired Kanish Chugh from Global X as its head of ETF sales for Australia.
Meanwhile, First Sentier launched its First Sentier Geared Australian Share Fund Complex ETF in May which seeks to deliver long-term growth by actively gearing a range of ASX 100 companies defined by strong balance sheets, ability to grow cash flows, and liquidity.
While it has offered passive funds in Australia for many years, BlackRock also launched its first active ETF in Australia which sits in the US equity space. The ASX-listed iShares US Factor Rotation Active ETF offers an actively managed US equities strategy with annual fees of 0.45 per cent.
However, the second and third predictions are yet to be achieved, State Street said.
Rather than US$30 billion ($46 billion), Australian ETF flows are tracking to stand at US$28 billion by the end of the year, it said. Meanwhile, cryptocurrency Solana is not yet offered in ETF format with only bitcoin and Ethereum options available so far.
While State Street is doubtful whether ETF flows will reach the target, Global X is predicting flows could reach as much as $50 billion which would substantially outpace those seen in 2024.
Net flows into Australian ETFs in the first half of 2025 rose by 97 per cent to reach $21.3 billion, which was concentrated in Australian and global equity products. This compares to just $10.8 billion in the prior corresponding period.
“Historically, the back end of the year tends to see a surge in ETF buying momentum. If that seasonal pattern holds true, the ETF market could be gearing up for a blockbuster finish, with inflows possibly climbing towards the $40–50 billion range, leaving last year’s $31 billion milestone in the rearview mirror.”
AUTHOR
Laura Dew
Recommended for you
After introducing its first active ETF to the Australian market earlier this year, BlackRock is now preparing to launch its first actively managed, income-focused ETF by the end of November.
Milford Australia has welcomed two new funds to market, driven by advisers’ need for more liquid, transparent credit solutions that meet their strong appetite for fixed income solutions.
Perennial Partners has entered into a binding agreement to take a 50 per cent stake in Balmoral Investors and appoint it as the manager of Perennial's microcap strategy.
A growing trend of factor investing in ETFs has seen the rise of smart beta or factor ETFs, but Stockspot has warned that these funds likely won’t deliver as expected and could cost investors more long-term.
