BetaShares Australian ETF Review - January 2020 | BetaShares

BetaShares Australian ETF Review – January 2020

BY Ilan Israelstam | 12 February 2020
Share
Australian ETF Industry Review Jan 2020

Reading time: 3 minutes

INDUSTRY STARTS THE YEAR WITH A BANG!

The relentless growth the Australian ETF industry has experienced shows no sign of abating, with the industry starting the new year with a bang! After closing 2019 at ~$62B in assets under management (AUM), the industry finished the first month of 2020 at $66B, growing $4.2B over the month (6.8% MoM growth) – the largest absolute monthly growth on record and the fastest % monthly growth in over four years. Read on for more details.

Australian ETP Market Cap: August 2001 – January 2020

Australian ETP Market cap - Jan 2020

CAGR: Compound Annual Growth Rate
Source: ASX, Chi-X, BetaShares

Market cap

  • ASX Exchange Traded Product Market Cap: $66.0B – New industry record
  • Market cap increase for month: 6.8%, +$4.2B – Largest absolute monthly growth on record, fastest % monthly growth in >4 years
  • Market cap growth for the last 12 months: 55%, + $23.5B – Greatest absolute growth over 12-mth period

Comment: Industry growth over the last 12 months was 55%, with absolute growth of $23.5B over this period, the highest level of growth over a 12 month period to date.

New money

  • Unit growth for month (units outstanding by number): +3.1%
  • Net new money for month (units outstanding by % value): +$1.9B 

Comment: Just under 50% of the month’s growth came from net inflows ($1.9B), with strong market performance contributing the remaining $2.3B of the industry’s growth.

Products

  • 256 Exchange Traded Products trading on the ASX and Chi-X – no new products launched this month.

Comment: No new products were launched in January, not surprising given the holiday period.

Trading value

  • ASX ETF trading value increased 14% and was once again above the $5B mark.

Comment: Trading on the ASX was very strong with >$5B of monthly value traded.

Performance

  • Top performance this month was from precious metals, namely Palladium and Precious Metals, followed by the Geared U.S. Dollar Exposure available via YANK.

Top 5 category inflows (by $) – January

Category                                                  Inflow Value
International Equities $718,991,413
Australian Equities $511,765,107
Fixed Income $395,527,694
Cash $67,518,530
Multi-Asset $55,197,237

Comment: After a very strong year in 2019 for Fixed Income, the table for net inflows by category reverted back to the pattern of flows we have seen for the majority of the industry’s history with international equities (~$718m) and Australian equities (~$511m) receiving the bulk of the money. That said, Fixed Income remained relatively strong (~$400m).

Top category outflows (by $) – January

No outflows by top level category

Top sub-category inflows (by $) – January

Sub-Category   Inflow Value
Australian Equities –  Broad $419,123,033
International Equities – Developed World $364,489,338
Australian Bonds $244,360,471
Global Bonds $151,167,224
International Equities – Sector $92,161,068

Top sub-category outflows (by $) – January

Sub-Category   Inflow Value
Australian Equities – Financials Sector ($26,004,336)
Australian Equities – Resources Sector ($3,472,073)

Comment: There was very little in the way of outflows in January, limited only to some selling in the Australian Financial Sector.

2 Comments

  1. Tom Vichta  |  February 12, 2020

    As owner of several of your ETF’s, I’m starting to get concerned about what would happen if there was an unexpected run on the equities markets (as has happened before) and a large no. of people suddenly listed their holdings for sale. Clearly the sale price would sink rapidly and disposal would be difficult to achieve satisfactorily. As there hasn’t been a crisis affecting ETF’s yet (but one day there will be ) The ETF market being much smaller than the ASX, what are your thoughts should (when) such an event occurs?

    1. Benjamin Smith  |  March 4, 2020

      Hi Tom,

      Thanks for reaching out.

      Whilst ETFs trade in a similar manner to stocks, there are some fundamental differences in their underlying liquidity. An ETF issuer can create or redeem units whenever there is a mismatch between the supply and demand on the ASX. When the ETF issuer creates or redeems units they will be buying or selling the underlying shares or assets which back the ETF. Hence, the liquidity of the ETF is limited only by the liquidity of the underlying shares or assets.

      In this manner, ETF holders would only be unable to dispose of their holdings when the underlying securities held by the ETF are illiquid.

      One of our insights posts delves a bit deeper into the underlying structure of ETF liquidity and provides a few examples: https://www.betashares.com.au/insights/how-liquid-are-etfs/

      Hope this helps.

      Sincerely,

      BetaShares Client Services

Leave a Reply