ETF industry beats LIC market

The Australian exchange-traded fund (ETF) industry surpassed the value of the listed investment company (LIC) market by around $60 million in September, according to BetaShares.

The latest “BetaShares Australian ETF Review” for the month ending September 2018 showed the Australian ETF industry reached a record high of $42.29 billion, while the LIC market reached $42.32 billion.

The first ETF in Australia was launched in 2001, while the first LIC was launched in 1936.

BetaShares chief executive Alex Vynokur said: “This is a significant new benchmark for the ETF industry, especially given the relatively short amount of time since ETFs have been available on the ASX (Australia Securities Exchange) versus LICs.”

Since 2009 and post the global financial crisis to the end of September 2018, ETF assets under management have grown at a compound annual growth rate around 39 per cent, while the LIC market has grown by about 11.5 per cent.

In terms of product numbers, there are 241 exchange-traded products on the ASX and 110 LICs.

Vynokur said he expects the ETF industry to be double the size of the LIC sector within four to five years.

The industry grew by 1.6 per cent or $663 million in September, notwithstanding industry asset value growth was negative, with 100 per cent of the monthly growth coming from new money rather than unit price appreciation. Net flows for the month were $839 million.

International equities experienced net inflows of $408 million, more than double the next category, broad Australian equities, with net inflows of $184 million. Fixed income ETFs experienced net inflows of $154 million.

There were 11 new products launched during September, including technology-based exposures such as BetaShares’ Global Robotics and Artificial Intelligence ETF and BetaShares’ Asia Technology Tigers ETF.

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