The exchange-traded fund (ETF) sector now has more than $100 billion in funds under management (FUM), driven by strong growth last year and into the first quarter of 2021, with further increases predicted by ETF manager BetaShares.
The company noted the sector held $95.2 billion in FUM at the end of 2020 and added around $8 billion in the first three months of this year to now stand at $102.9 billion in FUM. It predicted the sector would grow by a further 25 per cent over the rest of this year.
It said investor demand remained strong following 30 per cent year-on-year growth in FUM to $95.2 billion over 2020, with the addition of $33 billion the highest annual change on record. At the same time, trading volumes doubled from 2019, with around $100 billion in total value traded.
Three ETF providers – BetaShares, Vanguard and iShares – attracted around 70 per cent of inflows in the past 12 months, with the first two providers also becoming the first ETF issuers in the Australian market to record more than $5 billion in net inflows in a single year.
BetaShares chief executive Alex Vynokur said the ongoing investor demand for ETFs would continue to drive interest in ethical investment vehicles, which had surged in popularity during 2020, reflected in the BetaShares Global Sustainability Leaders ETF attracting more than $500 million in new investments.
“The increased interest in socially responsible investing coincides with widespread and growing concern around the environment and global warming,” Vynokur said.
“We think this interest is likely to continue as the global economy emerges from the COVID-19 pandemic.
“As economies open up again, investors will have a chance to look for portfolios and companies whose practices align with their ethical values, including less reliance on fossil fuels, stronger corporate governance and, partly as a result of the pandemic, increasing awareness of social factors.
“We expect ethical ETFs will continue to set a strong pace in 2021, with more ethical products to be launched to tap into investor demand.
“The Australian ETF industry has emerged from a year of uncertainty in a strong position. While we have recently seen some retail traders overseas caught up in speculative activity in particularly volatile stocks, investors more broadly continue to recognise the benefits of ETFs in establishing a resilient long-term portfolio. We are excited to see what the rest of 2021 brings.”
