Strong third-quarter investor inflows lift ETF assets to a record $219.5 billion.
Robust investor cash flows over the September quarter, most notably into international equity index-tracking ETFs, helped to lift the Australian ETFs industry’s assets under management to a new record high of $219.5 billion.
Investors are directing the bulk of their capital into index-tracking ETFs, which now account for more than 91% of total Australian ETF industry assets.
The value of Australia’s ETFs industry has risen by more than $46.6 billion since the start of this year, fuelled by the combination of strong investor inflows and global share market gains.
ASX and Vanguard data shows investor cash flows into Australian ETFs on a year-to-date basis have totalled $23.3 billion, including more than $12.7 billion over the September quarter alone.
This compared with $5.38 billion of investor inflows over the June quarter and $5.28 billion over the March quarter.
2024 investors inflows have already almost eclipsed the full-year inflows record of $23.6 billion set in 2021.
ETF investors continue to head offshore
ASX-listed international equity ETFs, primarily index-tracking funds, have accounted for more than 56% of total inflows this year as investors continue to target the strong growth experienced on U.S. share markets and, to a lesser extent, other offshore markets.
A further $7.7 billion of investor cash flows were directed into international equity ETFs over the September quarter, bringing the total amount invested in this segment during the nine months to 30 September to over $13 billion.
By comparison, around $2.09 billion flowed into Australian equity ETFs over the third quarter. This added to the $1.47 billion invested into this segment over the June quarter and the $1.48 billion over the March quarter.
“The appetite for international equity ETFs by investors is not subsiding and continues to outpace the inflows into Australian equity ETFs and other industry segments,” said Adam DeSanctis, Vanguard’s Head of ETF Capital Markets, Asia-Pacific.
“For Australian ETF investors, who now number over 2.2 million, the best investment strategy over 2024 and beyond is to focus on long-term investment growth while staying diversified across different markets and segments.
“Beyond diversification and ease of trading, which are the biggest motivations for investors choosing to use ETFs, a high percentage of investors see ETFs as the quickest and lowest-cost way to access different types of asset classes and offshore markets.”
Fixed income inflows accelerate
Meanwhile, inflows into Australian fixed income ETFs accelerated over the third quarter as investors targeted bond funds to lock in relatively higher income levels.
A total of $1.49 billion was directed into Australian fixed income assets over three months to 30 September, up from $601 million over the June quarter and $694 million over the March quarter. Inflows into international fixed income ETFs totalled $446 million compared with $286 million over the June quarter and $108 million over the March quarter.
Australian ETF market net cash flow by asset class (Q3 2024 vs Q2 2024 vs Q1 2024)
| Asset class | Q3 2024 Cash Flow ($m) | Q2 2024 Cash Flow ($m) | Q1 2024 Cash Flow ($m) |
|---|---|---|---|
| International equity | 7,760 | 2,610 | 2,674 |
| Australian equity | 2,092 | 1,473 | 1,484 |
| Australian fixed income | 1,491 | 601 | 694 |
| Commodity | 325 | 69 | -112 |
| International fixed income | 445 | 286 | 108 |
| Cash | 152 | -155 | -21 |
| Multi asset | 211 | 142 | 75 |
| Infrastructure | 184 | 210 | 308 |
| Australian property | -43 | -12 | -27 |
| International property | 125 | 170 | 134 |
| Currency | -8 | -12 | -6 |
| Digital currency | 37 | 8 | 0 |
| Total | 12,771 | 5,383 | 5,284 |
Sources: ASX and Vanguard data
Top 5 Vanguard Australia ETFs by cash flow (Q3 2024)
| Product | ASX Code | Cash Flow ($m) |
|---|---|---|
| Vanguard MSCI Index International Shares ETF | VGS | 861 |
| Vanguard Australian Shares Index ETF | VAS | 436 |
| Vanguard Australian Shares High Yield ETF | VHY | 386 |
| Vanguard MSCI Index International Shares (Hedged) ETF | VGAD | 330 |
| Vanguard All-World ex-US Shares Index ETF | VEU | 212 |
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Article courtesy of Vanguard.
