ETFs advance

World domination seems certain for ETFs as this week’s features bring you Bloomberg Intelligence’s Eric Balchunas’s predictions for ETF growth in the US over the coming year. ETFs will likely see an uptick of trillions in assets to their already strong flows over the next decade as more roads open up for legacy mutual funds to bring over their strategies and clients in a way that fits their needs, he says.

"This year, active ETFs have accounted for 71 per cent of the nearly 400 ETFs launched – another record and up from 20 per cent five years ago," Balchunas says. "The issuers tend to be big, combining for trillions of dollars in legacy mutual fund assets. Index-based ETFs are still taking in nearly 80 per cent of net flows, though for years that number topped 95 per cent. We think it will continue to go down as more issuers launch active products and the fees keep dropping."

More growth news came from a bit further afield for those of us based in the UK, with Australia’s Computershare publishing its 2023 ETFs Insights Report which reveals the number of retail investors in Australian ETF registers that the company administers has grown by 230 per cent since 2020.

The report shows that half (50.5 per cent) of ETF investors that the company oversees own only one ETF, with almost a quarter (23.7 per cent) owning just two.

The publication’s data also show that almost half 47.7 per cent of Australian ETF investors registered with Computershare have a portfolio of AUD10,000 or less, with 61.1 per cent of retail investors boasting portfolios of this size.

Ibrahim Hussein, Head of ETFs at Computershare Australia and New Zealand, said: "It’s clear that Australian investors are continuing their love affair with ETFs, with many factors driving the product’s continuing popularity, including easy-access trading platforms, lower fees and investors becoming more likely to move their disposable income into the share market since the start of the pandemic."

Beverly Chandler, Managing Editor

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