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Industry starts the year on a new record high!
In a month that is typically quiet for the Australian ETF industry, the industry started off the year strongly, reaching a fresh record high of $42.5B total industry FuM at month end. The industry’s total market cap increased by ~4.3% ($1.7B) – the second largest monthly assets increase on record. With markets rebounding the industry growth was assisted by price increases, which accounted for 60% of the monthly move- the remaining ~40% being as a result of net inflows of ~$700m.
International equities continued to be the largest category for inflows, along with continued strong flows into bonds. It was however telling that, at a sub-category level, it was actually Australian Bond exposures that received the highest amount of inflows, with Floating Rate Bond Exposures (via QPON), leading the way in that category. Read on for more analysis of the month in ETFs.
Market cap
- ASX Exchange Traded Funds Market Cap: $42.5B
- Market cap increase for month: 4.3%, +$1,731M – 2nd largest increase on record
- Market cap growth for last 12 months:16%, + $5.9B
Comment: ETP Market Cap has made a significant recovery in January, with the monthly results only eclipsed once before in November 2017 ($2B monthly growth)
New money
- New unit growth for year (units outstanding by number): +1.7%
- Net new money for month (units outstanding by $ value): +$696.5M
Comment: With the equity market recovering, ~$1B of the month’s growth came from asset value appreciation, although $700m of net flows is still a decent month’s result given the typically quiet January.
Products
- 246 Exchange Traded Products trading on the ASX – no new products launched, 1 product matured
Trading value
- Trading value declined 18% for the month
Performance
- Top performing products this month were the BetaShares Geared U.S. Equities Fund (hedge fund) (ASX: GGUS) and the BetaShares Crude Oil Index ETF – Currency Hedged (ASX: OOO)
Comment: Unsurprisingly, the geared U.S. equity fund (GGUS) was the #1 performing fund for the month – with performance of ~19% for the month.
Top 5 category inflows (by $) – January 2019
| Category | Inflow Value | |
| International Equities | $ 242,720,347 | |
| Fixed Income | $ 188,761,742 | |
| Australian Equities | $ 137,465,727 | |
| Multi-Asset | $ 26,471,750 | |
| Australian Listed Property | $ 11,822,767 | |
Comment: It is no surprise that International Equities exposures continued to drive the ETF industry during the first month of 2019. It is notable, however, that Fixed Income ETFs have overtaken Australian Equities for the month and we predict that this trend may continue throughout the year.
Top category outflows (by $) – January 2019
| Category | Outflow Value | |
| Currency | ($4,310,330) |
Top sub-category inflows (by $) – January 2019
| Sub-Category | Inflow Value | |
| Australian Bonds | $ 162,862,014 | |
| Australian Equities – Broad | $ 140,061,939 | |
| International Equities – Developed World | $ 131,167,081 | |
| Cash | $ 77,862,621 | |
| International Equities – Sector | $ 57,391,413 | |
Comments: Many investors continue to be concerned about the state of equity markets, as evident in the adoption of more defensive assets like Australian Bonds and Cash.
Top sub-category outflows (by $) – January 2019
| Sub-Category | Outflow Value | |
| Australian Equities – Financial Sector | ($16,997,826) | |
| Australian Equities – Resources Sector | ($11,363,486) | |
| Australian Equities – Geared | ($9,152,646) | |
| Currency | ($4,310,330) | |
| International Equities – Geared | ($1,341,690) | |
We believe the industry will continue to grow strongly in 2019 – and forecast total industry FuM at end 2019 to be in the range of $50-55B . Read our 2019 predictions article and stay tuned for our monthly ETF review throughout the year!