In a hallmark year, the Australian exchange traded fund (ETF) market saw a number of key metrics reach record levels in 2014. The industry recorded its highest ever annual growth in 2014, with funds under management increasing by $5 billion (up 50% on 2013) to end the year at a new record high of $15 billion. Records were also broken for net inflows and trading value. Highlights of our Year End Review for 2014 are set out below:
- ASX Exchange Traded Funds Market Cap: $15B – new record high
- Market cap growth for year: 50%,+ $5.0B
- New unit growth for year (units outstanding by number): 46%
- Net new money (units outstanding by $ value): +$4.3B
Comment: This level of growth is nothing short of extraordinary, capping off a massive year for the industry. To put this level of growth into context, the previous record (from 2013) was $3.5B of growth. Perhaps most strikingly of all, the vast majority of the growth for the year (86%) came from net inflows in a year where stock market conditions were mixed across locations.
The level of new money inflows ($4.3B) was up 180% on the net inflows of 2013. This compares to a 3% decrease in net inflows into retail managed funds for 12 months to September 2014. Notwithstanding back to back years of +50% growth, we believe the industry will continue to grow strongly in 2015 – and forecast total industry FuM at end 2015 to be in the range of $21-$23B .
- 101 Exchange Traded Products trading on the ASX
- New products: 12 new products launched in the year (vs. 11 in 2013), no products closed
Comment: We consider 12 new products over the course of the year to be a relatively slow pace, and expect this number to be significantly higher at end 2015
- Trading value increased 37% compared to 2013 – record trading year for ETFs
- Global Real Estate and Healthcare, followed by Australian REITS, the best performing products over 2014
Top Inflows by Category
|International Equities – Developed||$1,408,774,665|
|Aus. High Yield||$721,489,162|
|Aus. Equities – Broad||$686,496,200|
|Aus. Fixed Income||$281,736,612|
Comment: Products providing exposure to developed market international equities, particularly the US were by far the largest beneficiary of inflows, attracting ~$1.4B of inflows;~$720m of new money flowed into Australian high yield equity products – exemplifying the continued desire of investors for income, particularly as capital growth stalled in 2014; ~$370m of new money flowed into the Australian High Interest Cash ETF – with investors balancing their riskier allocations with the stability of cash.
Top Outflows by Category
Comment: Outflows were generally very low, and essentially restricted to commodities (-$43m for the year) and, in particular unhedged gold –as gold continued to be eschewed by investors.