Report highlights
– The ETF market grew 20% over the year to $21.3 billion in funds under management.
– The top performing ETF for the year was the BEAR ETF which rose 11%.
– For a second year the bottom performing ETF was the Crude Oil ETF which fell -44%.
– 128 ASX-listed ETFs have been analysed in the report and rated out of 5
– 23 earned the highest rating of 4 or 5 ‘spots’
– 37 received the lowest rating of 0 or 1 ‘spot’
– Australian investors continue to switch out of managed funds and direct shares into ETFs. According to Investment Trends, the number of Australians invested in ETFs grew 37% over the past year to 202,000. Globally, 2015 was the biggest year on record for money leaving actively managed funds for inedx funds and ETFs.
– ANZ became the first of the big Australian banks to enter the ETF market, launching 6 new ETFs across a range of asset classes.
– A warning to be cautious about popular ETF themes in last years report has proven timely as the glamour ETFs of recent years such as Chinese shares, global shares and dividend ETFs have all disappointed in 2015/16.
– The Stockspot ETF portfolios have continued to outperform cash and broad Australian shares in a sideways market, returning 4% – 4.5% p.a. over 2 years.
Stockspot, Australia’s leading automated investment adviser and fund manager, today released the 2016 Australian ETF Report which seeks to analyse and compare ASX-listed ETFs.
Exchange traded funds (ETFs) can be traded on the ASX in the same way as shares in a company. Rather than owning shares in a business, an ETF tracks an asset class, such as Australian shares or global shares, and provide direct exposure to a wide range of investments within that asset class.
The ETF market grew 20% over the year to $21.3 billion in funds under management (FUM).
Global share ETFs maintained their position as the largest ETF sector, with $7.9 billion of FUM, up 18% for the year. 13 of the 28 new ETFs for the year were global share ETFs.
Fixed income and cash ETFs continued to grow in popularity as investors looked to diversify and access higher yields than the low interest rates available in savings accounts. The first global fixed income ETFs were also launched during the year. The sectors’ FUM grew 40% to $2.2 billion.
Performance was also strong with the highest average return of all ETF sectors over the past year.
Defensive ETFs enjoyed the largest percentage gains in 2015/16, including the BEAR ETF (which aims to provide an inverse return to the Australian share market), several property ETFs and a global consumer staple ETF. Overall, gains have been modest with the top performers returning 8% to 11% compared to several 40%+ returns at the same point one year ago.
Stockspot CEO, Chris Brycki hopes that the report will help improve investor education about ETFs in Australia and raise awareness of the different types of ETFs available.
“Whether investors are building their own portfolios or using an automated service like ours, ETFs provide a fantastic low-cost way to invest. We hope this report helps investors and advisers become better informed about the expanding ETF universe in Australia.” commented Brycki.
Stockspot expects the local ETF market to continue growing rapidly and play an even larger role in the wealth management strategies of Australians in the future. “The global ETF market broke through US$3.0 trillion mark last year so Australia is still lagging the rest of the world by a long way.
Based on the size of our market, ETF assets could easily exceed $50 billion within 3 years compared to $21.3 billion today.”
