BetaShares Australian ETF Review - March 2020 | BetaShares

BetaShares Australian ETF Review – March 2020

BY Ilan Israelstam | 15 April 2020
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aus etf review_Mar2020

Reading time: 3 minutes

INVESTORS TURN TO ETFs AS VOLATILITY REIGNS SUPREME

Trading volumes in ETFs grew exponentially in March, even as funds under management (FuM) declined in line with falling equity markets. The extraordinary growth in turnover saw ASX ETF trading value hit an all-time high of ~$18B, shattering the previous monthly record of $7.2B recorded only a month before. Read on for more details.

Australian ETP Market Cap: July 2001 – March 2020

aus etp market cap - Mar 2020

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

Market cap

  • ASX Exchange Traded Product Market Cap: $57.2B 
  • Market cap change for month: -10.6%, -$6.8B – biggest % monthly fall since the GFC, largest $value fall on record
  • Market cap growth for the last 12 months: 24%, + $11.1B

Comment: Industry FuM fell by $6.8B (-10.6% MoM decline) to end March at $57.2B. This represents the largest monthly FuM decline in dollar terms on record as well as the biggest % monthly fall since the global financial crisis.

New money

  • Unit growth for month (units outstanding by number): +2.8%
  • Net new money for month (units outstanding by % value): +$522M 

Comment: Notwithstanding the volatility and market declines however, it is notable that inflows into ETFs remained positive, mirroring what we have seen in more developed ETF industries such as the U.S. and Canada. Regular readers of this Review will note that this was also the case in February, where asset values fell but overall inflows remained positive. The industry had positive net inflows in March of $522M.

Products

Trading value

  • ASX ETF trading value grew exponentially – growing ~150% v. the month before to set an all-time record month of trading – $17.8B. This number is 2.5x the previous monthly record ($7.2B)

Comment: Without question, the most notable feature of the month was the exponential growth in trading, with Australian investors turning to the liquidity of ETFs to express their investment views like never before. ASX ETF trading value reached an all-time high of ~$18B, a number that is 2.5x the previous monthly record of $7.2B recorded only a month before.

Performance

  • Given market declines, the top 3 products for performance were the BetaShares Bear Suite of Funds, namely BBOZ (+33%), BBUS (+22%) and BEAR (+17%)

Comment: We saw particularly heavy trading in our Australian Strong Bear Hedge Fund (ASX: BBOZ) which was the number one most traded product in March, trading ~$2B in value for the month.

Top 5 category inflows (by $) – March 2020

Category                                                  Inflow Value
Australian Equities $1,116,032,018
Commodities $271,348,377
Short $203,042,480
Currency $58,389,283
Multi-Asset $33,129,288

Comment: The volatility and market declines saw investors heavily rotate into broad Australian equities products (which received ~$1.1B of net inflows) with the large broad market Australian shares products all receiving significant inflows. Interestingly, and for the first time since their launch, March additionally saw robust inflows into hedged international products, with investors seemingly believing that the strength we have seen in the US$ may be finally reaching a plateau.

Top category outflows (by $) – March 2020

Sub-Category   Inflow Value
Fixed Income ($770,202,503)
Cash ($376,211,197)
International Equities ($35,365,061)

Comment: Fixed income and cash exposures were sold down significantly with $770m and $376m of outflows respectively.

Top sub-category inflows (by $) – March 2020

Sub-Category   Inflow Value
Australian Equities – Broad $913,334,695
Gold $213,034,264
Australian Equities – Short $135,611,840
International Equities – Developed World $89,800,445
U.S. Equities – Short $67,430,640

Top sub-category outflows (by $) – March 2020

Category                                                  Inflow Value
Australian Bonds ($535,102,824)
Cash ($376,211,197)
Global Bonds ($235,099,680)
International Equities – U.S. ($75,171,960)
International Equities – Asia ($40,366,426)

 

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