Register For Our Mailing List

Register to receive our free weekly newsletter including editorials.

Home / 194

Australian ETF industry comes of age

The sixth annual BetaShares/Investment Trends ETF Report provides a unique snapshot of the key statistics and drivers in the Australian Exchange Traded Fund (ETF) industry, from the perspective of individual investors, SMSFs and financial planners. This year’s findings indicate a ‘coming of age’ in the Australian ETF industry.

Key findings of the Report

The insights gleaned from the research are based on responses from approximately 9,000 investors and 676 advisers, and include:

  • The number of ETF investors in Australia grew at an annualised rate of 31% in the 12 months to September 2016
  • Millennials are increasingly embracing ETFs, and newer ETF users are significantly younger than ‘early adopters’
  • 38% of ETF investors invest via an SMSF with usage growing strongly
  • Seven out of 10 financial planners currently recommend ETFs or intend to do so in the future
  • Advisers exhibit strong appetite for actively managed ETFs.

Size and growth: the emergence of the millennial investor

The number of Australian investors using ETFs has grown to a record number of 265,000, up from 202,000 in the previous year.

While ETF investors are on average 51 years old, including a third who are already retired, the average age of investors who invested in ETFs for the first time in the past year is 39 years, significantly lower than those who first started using ETFs five years ago at an average age of 58. This is a striking statistic and shows how mainstream the ETF industry in Australia is becoming, as well as how important the younger or millennial investor will be to the industry in the future.

ETF industry

ETF industry

Source: BetaShares/Investment Trends ETF Report

To further emphasise this, among the online share investor population, the appetite for ETFs is greater among the younger cohort. About 37% of millennials say they use or intend to use ETFs in the coming year, versus 31% for Gen X investors and 28% for baby boomers.

Strong demand from retail and SMSF investors

Repeat investment into ETFs is high, with 70% of investors indicating they would consider re-investing in ETFs in the next 12 months.

The majority of investments into ETFs represents new money into the industry, with 56% of ETF investors buying the products with incremental investment monies, rather than decreasing their allocation to direct shares or managed funds.

ETF industry

Source: BetaShares/Investment Trends ETF Report

The number of SMSFs holding ETFs has grown in line with the increase in the number of ETF users, with 38% of ETF investors holding ETFs through their SMSFs. This investor class continues to drive industry growth.

SMSFs who use ETFs typically cite a wider range of reasons for using them, especially access to overseas markets and for specific investment types.

Diversification remains the primary driving factor, with 72% of investors citing this as a reason for using ETFs.

Financial planners can tap into client demand for ETFs

Use of ETFs is widespread among financial planners, with 7,500 or 43% of Australia’s financial planners currently recommending ETFs. This number looks set to grow with seven out of 10 either already recommending ETFs or intending to do so in the future.

Number of financial planners using ETFs in Australia

ETF industry

Source: BetaShares/Investment Trends ETF Report

Financial planners who recommend ETFs are using them more extensively for new inflows, and plan to further increase their use. In terms of motivations for using ETFs, financial planners predominantly cite low cost, with diversification the second most commonly cited driver.

There remains significant opportunity for advisers to tap into consumer demand for ETFs, with only 21% of current ETF investors saying an adviser played a role in their most recent ETF investment.

Advisers also have a strong interest in actively managed ETFs, with 52% indicating they would like to use these products in the next 12 months if available to them.

Outlook for the sector

The Report projects a record 315,000 Australians will be invested in ETFs by September 2017.

The ETF sector in Australia is following in the footsteps of more mature ETF markets around the world. Recent research conducted by Blackrock indicates that 52% of individual investors and 94% of financial advisers in the US expect to invest in ETFs in the next 12 months (research from February 2017). While easy to gloss over, consider the significance of those figures - most individual investors and virtually every financial planner in the US expect to start or are already allocating to ETFs in the coming year. Contrast this to Australia where we estimate that approximately 4% of individual investors are currently using ETFs. That’s a lot of potential growth!

Investors will continue to tap into ETFs for a broader range of investment needs. In line with the growth we are seeing, we project the industry will grow from the current $25 billion and reach $30-33 billion in funds under management, with approximately 250 exchange-traded products, by the end of 2017.


Ilan Israelstam is Head of Strategy & Marketing at BetaShares, a sponsor of Cuffelinks. A summary copy of the Report is available on request from This article is general information and does not address the needs of any individual.

Latest editions of BetaShares’ monthly ETF Review can be accessed here.


Leave a Comment:



$100 billion! Five reasons investors are flocking to ETFs

November 2020 was an historic month for ETFs

Global ETFs: insights into a multi-trillion-dollar industry


Most viewed in recent weeks

10 reasons wealthy homeowners shouldn't receive welfare

The RBA Governor says rising house prices are due to "the design of our taxation and social security systems". The OECD says "the prolonged boom in house prices has inflated the wealth of many pensioners without impacting their pension eligibility." What's your view?

House prices surge but falls are common and coming

We tend to forget that house prices often fall. Direct lending controls are more effective than rate rises because macroprudential limits affect the volume of money for housing leaving business rates untouched.

Survey responses on pension eligibility for wealthy homeowners

The survey drew a fantastic 2,000 responses with over 1,000 comments and polar opposite views on what is good policy. Do most people believe the home should be in the age pension asset test, and what do they say?

100 Aussies: five charts on who earns, pays and owns

Any policy decision needs to recognise who is affected by a change. It pays to check the data on who pays taxes, who owns assets and who earns the income to ensure an equitable and efficient outcome.

Three good comments from the pension asset test article

With articles on the pensions assets test read about 40,000 times, 3,500 survey responses and thousands of comments, there was a lot of great reader participation. A few comments added extra insights.

The sorry saga of housing affordability and ownership

It is hard to think of any area of widespread public concern where the same policies have been pursued for so long, in the face of such incontrovertible evidence that they have failed to achieve their objectives.

Latest Updates


$1 billion and counting: how consultants maximise fees

Despite cutbacks in public service staff, we are spending over a billion dollars a year with five consulting firms. There is little public scrutiny on the value for money. How do consultants decide what to charge?

Investment strategies

Two strong themes and companies that will benefit

There are reasons to believe inflation will stay under control, and although we may see a slowing in the global economy, two companies should benefit from the themes of 'Stable Compounders' and 'Structural Winners'.

Financial planning

Reducing the $5,300 upfront cost of financial advice

Many financial advisers have left the industry because it costs more to produce advice than is charged as an up-front fee. Advisers are valued by those who use them while the unadvised don’t see the need to pay.


Many people misunderstand what life expectancy means

Life expectancy numbers are often interpreted as the likely maximum age of a person but that is incorrect. Here are three reasons why the odds are in favor of people outliving life expectancy estimates.

Investment strategies

Slowing global trade not the threat investors fear

Investors ask whether global supply chains were stretched too far and too complex, and following COVID, is globalisation dead? New research suggests the impact on investment returns will not be as great as feared.

Investment strategies

Wealth doesn’t equal wisdom for 'sophisticated' investors

'Sophisticated' investors can be offered securities without the usual disclosure requirements given to everyday investors, but far more people now qualify than was ever intended. Many are far from sophisticated.

Investment strategies

Is the golden era for active fund managers ending?

Most active fund managers are the beneficiaries of a confluence of favourable events. As future strong returns look challenging, passive is rising and new investors do their own thing, a golden age may be closing.



© 2021 Morningstar, Inc. All rights reserved.

The data, research and opinions provided here are for information purposes; are not an offer to buy or sell a security; and are not warranted to be correct, complete or accurate. Morningstar, its affiliates, and third-party content providers are not responsible for any investment decisions, damages or losses resulting from, or related to, the data and analyses or their use. Any general advice or ‘regulated financial advice’ under New Zealand law has been prepared by Morningstar Australasia Pty Ltd (ABN: 95 090 665 544, AFSL: 240892) and/or Morningstar Research Ltd, subsidiaries of Morningstar, Inc, without reference to your objectives, financial situation or needs. For more information refer to our Financial Services Guide (AU) and Financial Advice Provider Disclosure Statement (NZ). You should consider the advice in light of these matters and if applicable, the relevant Product Disclosure Statement before making any decision to invest. Past performance does not necessarily indicate a financial product’s future performance. To obtain advice tailored to your situation, contact a professional financial adviser. Articles are current as at date of publication.
This website contains information and opinions provided by third parties. Inclusion of this information does not necessarily represent Morningstar’s positions, strategies or opinions and should not be considered an endorsement by Morningstar.

Website Development by Master Publisher.