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Australian ETF Review: June 2019 half-year

Industry breaks the $50 billion milestone

• The first six months of 2019, saw a number of records broken in the ETF industry, which broke the $50B milestone as at end June.

• The industry’s funds under management increased a very significant 25% for the half to end the financial year at a new record high of $50.9B, with the industry growing FuM by a full $10.1B

• The source of growth for the industry was approximately split evenly, with 43% of the growth coming from net inflows (i.e. rather than asset appreciation) - $4.4B flowing into the industry over the course of the half-year. This compares to a figure of $2.7B for the first half of 2018, showing that the pace of industry growth is well and truly on the rise

• Flows by issuer were relatively more concentrated than 2018 with the top 2 issuers (Vanguard & BetaShares) receiving ~60% of the industry flows and the largest 3 issuers combined receiving ~80% of flows (being Vanguard, BetaShares and iShares)

• Product development activity was somewhat muted for the first half of 2019, with only 7 new products launched (compared to 10 new products launched in the first half of 2018). That said, we do expect significantly more product launches in the second half of the year.

• By inflows, passive index products took in the vast majority of flows for this half year (82%), which took share away from both Active and Smart Beta exposures which each took 9% of industry flows

• Given the fast growth of the industry this year to date, we are upgrading the forecast we made at the end of last year ($50-$55B) and now expect total industry FuM at end 2019 to be in the range of $55-$60B.

 

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