ASX ETF market cap nears $200 billion

ASX exchange traded funds (ETFs) have seen strong growth, with total funds under management (FUM) increasing by 36% to $199 billion in the 12 months to 30 June 2024. An ETF trades on the ASX like a regular share, but is an open-ended investment that typically tracks a basket of securities or other asset classes such as gold. Investors are often drawn to ETFs for their ability to provide diversification to an investment portfolio and this trend continued with 59 new products admitted during the financial year, bringing the total number of ETFs available to 351.

Andrew Campion, Managing Director, Investment Products and Strategy said: “ETFs continue to be a popular investment vehicle, with the average number of transactions over a 12-month period increasing by 50%. The growth rate is very impressive – just ten years ago, ETFs were under $10 billion.

“ETFs offer investors an effective way to diversify their portfolios and gain targeted exposure to specific sectors. Over the past 12 months, we have welcomed a number of new issuers, including Macquarie and Dimensional Fund Advisers. We also admitted the ASX’s first bitcoin spot ETF last month, issued by VanEck, and launched Australia’s first-ever Shariah-compliant Sukuk active ETF, issued by Hejaz Financial Services.

“One trend we’ve seen over the past year is that we’re seeing a lot more active ETFs coming to market, offering investors more personalized investment portfolios.

“If I had to sum up in one word what’s next for the Australian ETF market, it would be ‘choice’: more choice of fund managers, more thematic ETFs, more active strategies and more alternative assets such as cryptocurrencies. There’s a lot of innovation happening and it’s going to be an exciting area to watch.”

According to the latest ASX Investment Products Report, Australian and global equities accounted for the majority of FUM growth over the past 12 months, increasing by $15 billion (up 37%) and $29 billion (up 32%) respectively, followed by strong growth in fixed income of $5.2 billion (up 24%), reflecting the higher interest rate environment.

As the number of investors continues to grow, the popularity of ETFs is expected to increase. Currently, 7.7 million Australians invest in stock market investments, with 1.5 million holding at least one ETF, according to theAnd ASX Exchange Australian Investor Study 2023.

Source: ASX

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