Australians now investing more than $50 billion in ETFs

Vanguard | 10 July 2019


The Australian ETF market has reached another milestone, growing to just over $50 billion in assets under management in the second quarter of 2019, according to the latest figures from the ASX.

With the tailwinds of strong market returns and robust cash flows, the ETF market has grown by $10 billion or 25 per cent in the first half of 2019, as investors continue to embrace the flexibility, low cost and diversification that ETFs can offer.

ETF investors in Quarter 2, 2019 continued to display a flight to more defensive products with the first half of the year seeing Australian fixed income ETFs receiving the largest proportion of cash flows of any asset class.

Cash flows into domestic fixed income surpassed flows into Australian and international shares, and over the quarter Australian fixed income flows represented 36.5 per cent of overall flows, or $1.02 billion.

Commenting on the growth, Vanguard’s Head of Equity Index Asia Pacific, Duncan Burns, said “Following a slow start to the year, cash flows into Australian shares ETFs returned to more normal levels during the June quarter, potentially reflecting the outcome of the federal election with fears of franking credit policy changes put to rest.

“The heightened interest in fixed income is potentially reflecting investors' concerns about equity market growth prospects, with recently announced interest rate cuts not seeming to deter investors.

“Including an allocation to fixed income in your portfolio is a great way to increase balance and diversification, but we would caution that, as with any asset allocation decisions, it should be done in line with investors' long term goals, rather than a reaction to market events or cycles,” said Mr Burns.

Vanguard's ETFs continued to attract the largest share of industry cash flows in the June quarter with $1.16 billion invested in the three months to 30 June, representing our second largest quarter to date.

Flows into Vanguard products followed the industry trend with fixed income ETFs seeing a high percentage of cash flow. Overall, Vanguard now manages $15.7 billion in assets for Australian investors in its range of exchange traded funds.

During the quarter, Vanguard reduced the fee for its flagship Australian equities ETF, VAS, to 0.10 per cent per annum, through its scale as the second largest ETF on the market, reflecting Vanguard's ongoing commitment to helping investors meet their long-term-goals with low-cost solutions.

About Vanguard

With more than AUD $7.6 trillion in assets under management as of 31 March 2019, including more than AUD $1.4 trillion in ETFs, Vanguard is one of the world’s largest global investment management companies. In Australia, Vanguard has been serving financial advisers, retail clients and institutional investors for more than 20 years.

Martha Wood
Media & External Communications Manager
Vanguard Australia
+61 410 470 165