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ETF INDUSTRY CATCHES A COLD…AND TRADES UP A STORM
After 14 straight months of growth, the Australian ETF industry encountered a rare month of negative growth in February. After starting the year with a bang, industry FuM fell by $2.0B (-3.1% MoM decline) to end February at $64.0B. Read on for more details.
Australian ETP Market Cap: August 2001 – February 2020
Source: ASX, Chi-X, BetaShares
Market cap
- ASX Exchange Traded Product Market Cap: $64.0B
- Market cap increase for month: -3.1%, -$2.0B – first monthly decrease in 14 months
- Market cap growth for the last 12 months: 43%, + $19.2B
Comment: Net inflows into the industry were not enough to counter the dramatic drops in equity prices resulting in our first monthly decrease in 14 months. Importantly, notwithstanding tremendous volatility, all ETFs in the industry performed as expected, which will provide a ‘real life’ case study for those observers who had previously felt that ETFs had not been tested in rapidly falling markets.
New money
- Unit growth for month (units outstanding by number): +2.5%
- Net new money for month (units outstanding by % value): +$1.6B
Comment: Notably, $ inflows into the industry remained positive at $1.6B with the industry’s fall entirely attributable to asset value declines as markets tumbled in the last week of the month.
Products
- 255 Exchange Traded Products trading on the ASX and Chi-X – 1 new product launched this month.
Trading value
- ASX ETF trading value increased 42% to reach an all-time record month of trading – $7.2B
Comment: Perhaps the most striking statistic this month was trading values which reached all time monthly highs, growing 42% MoM and >$7B traded on ASX-quoted ETFs for the first time. This large increase in trading mirrors what we saw globally – with investors seeking out the liquidity of ETFs during volatile times to express both bullish and bearish views.
Performance
- Top performance this month was from Palladium, followed by the Strong Bear Products, BBUS (US Equities) and BBOZ (Australian Equities).
Comment: Given their negatively correlated objectives, each rallied >20% for the month as equity markets fell.
Top 5 category inflows (by $) – February
| Category | Inflow Value | |
| International Equities | $935,433,158 | |
| Fixed Income | $306,359,541 | |
| Commodities | $176,865,128 | |
| Cash | $122,328,315 | |
| Australian Equities | $86,849,945 | |
Comment: For the second month in a row, it was still global equities products that received the largest levels of inflows ($935m) with fixed income coming in second place this month ($306m). Broad Australian and Asian Equities products were sold off with investors seemingly viewing the US market as more able to weather the current economic storm.
Top category outflows (by $) – February
| Sub-Category | Inflow Value | |
| Multi-Asset | ($11,406,238) | |
| Currency | ($7,220,055) | |
Top sub-category inflows (by $) – February
| Sub-Category | Inflow Value | |
| International Equities – US | $330,783,147 | |
| International Equities – Developed World | $330,417,092 | |
| Australian Bonds | $183,608,087 | |
| Gold | $159,011,816 | |
| Australian Equities – Ethical | $136,559,893 | |
Top sub-category outflows (by $) – February
| Category | Inflow Value | |
| Australian Equities – Broad | ($46,526,022) | |
| International Equities – Asia | ($31,541,224) | |
| Australian Equities – Resource Sector | ($15,654,260) | |
| Multi-Asset | ($11,406,238) | |
| Currency | ($7,220,055) | |
The March report should be really interesting. Thank you.
Hi Wayne,
Thanks for reaching out.
We’ve recently released the March 2020 ETF Review- you can find it via the following link: https://www.betashares.com.au/insights/betashares-australian-etf-review-march-2020/.
Sincerely,
BetaShares Client Services