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INDUSTRY RECEIVES ANOTHER $1B OF NET FLOWS AS IT INCHES TOWARDS $50B
- Falling U.S. equities slowed the rise of the industry this month, with 100% of growth coming from net inflows (+$990m)
- That said, the industry once again eked out a fresh record high, as it inches towards the milestone $50B mark
- The industry ended May at a record $48.7B with a monthly market cap increase of 1.4% (+$670m)
- May also saw the industry reach a new all-time record in terms of trading value, with greater than $4B of value traded over the month for the first time
- In terms of category demand, it was Australian shares and bonds that received the highest amount of flows – both categories receiving ~$250m of net flows
- As we’ve discussed before, Fixed Income products have received significantly more attention this year than ever before, as investors continue to exhibit caution on the equities market. Year to date, Fixed Income is the number one category for flows in the industry, marginally beating out the ever-popular International Equities category
- The BetaShares Australian High Interest Cash ETF (ASX: AAA) was once again the #1 product for net inflows this month – with ~$157m of new money added
- With escalating tensions in the US-China trade wars, the U.S. market dropped significantly – which led to strong performance in BetaShares U.S. Equities Strong Bear Hedge Fund (ASX: BBUS) – with ~16% monthly return, this was the month’s top performing fund. The second best performer was soft commodities, with BetaShares Agriculture ETF- Currency Hedged (ASX: QAG) returning ~8% for the month
- Net outflows at a category and sub-category level were limited to Gold and U.S. dollar exposures, possibly a result of profit taking by investors
Market cap
- ASX Exchange Traded Funds Market Cap: $48.7B – New industry record
- Market cap increase for month: 1.4%, +$670M
- Market cap growth for last 12 months: 27%, + $10.2B
New money
- Unit growth for year (by number): +1.4%
- Net new money for month: +$989m
Products
- 241 Exchange Traded Products trading on the ASX – 1 new Active ETF launched (Australian Small Caps) and 3 single bond products reached maturity
Trading value
- Trading value increased significantly (42%) to reach an all-time high in monthly trading, and the first time we’ve seen more than $4B of ETFs traded in a single month
Performance
- With the U.S. markets falling sharply, the best performing product this month was the BetaShares U.S. Equities Strong Bear Hedge Fund (ASX: BBUS) with ~16% monthly return. We also saw strong performance in commodities, with BetaShares Agriculture ETF- Currency Hedged (ASX: QAG) returning ~8% for the month.
Comments: The continuation of the trade war between the US and China sent U.S. markets into a downward spiral in May, creating a profitable outcome for BBUS, a fund that seeks to profit from a fall in the U.S. market.
Top 5 category inflows (by $) – May 2019
| Category | Inflow Value | |
| Australian Equities | $ 257,890,171 | |
| Fixed Income | $ 253,402,804 | |
| International Equities | $ 211,594,092 | |
| Cash | $ 180,616,603 | |
| Australian Listed Property | $ 72,616,810 | |
Comment: Despite volatility in international markets during May, Aussie Equities saw significant flows, along with Fixed Income and Cash, which has become a consistent trend during 2019 as investors continue to fortify their portfolios.
Top category outflows (by $) – May 2019
| Category | Outflow Value | |
| Commodities | ($ 25,225,534) | |
| Currency | ($ 25,180,231) |
Top sub-category inflows (by $) – May 2019
| Sub-Category | Inflow Value | |
| Australian Equities – Broad | $ 193,882,894 | |
| Australian Bonds | $ 190,999,000 | |
| Cash | $ 180,616,603 | |
| International Equities – Developed World | $ 133,956,380 | |
| Australian Listed Property | $ 72,616,810 | |
Comment: As investors are taking more defensive positions, a broader selection of product sub-categories are being considered, with strong flows into Australian Bonds, Cash and Australian Listed Property for the month.
Top sub-category outflows (by $) – May 2019
| Sub-Category | Outflow Value | |
| Gold | ($ 25,225,534) | |
| Currency | ($ 25,180,231) | |
| International Equities – Europe | ($ 6,696,968) | |
| Australian Equities – Large Cap | ($ 2,935,295) | |
| Australian Equities – Small Cap | ($ 1,067,506) | |
Comments: Despite returning a positive 1.7% last month, Gold was interestingly sold off, along with a not so surprising sell-off in currency ETPs, that continues the trend we have seen over the past few months.