Exploring ETF trends

By Mark Monfort, ETF Tracker

Understanding ETP (Exchange Trade Products) is more important than ever given the rapid growth in this asset class. There are more ETFs coming into the market and investor interest is at an all-time high. This makes it so much more important to know where to go for good data in this space. There are two great sources of data that come out each month directly from the major exchanges (and they’re both free) but they also have limitations. The ASX and Chi-X produce these monthly reports on the state of play in the ETP space across a number of metrics ranging from performance to transactions to inflows and more. The issue is that they sit in static PDF reports or in separate Excel sheets that you need to manually pull together to gain any insights. For the adept spreadsheet manipulator, this can be easy but time-consuming. For the Excel-phobic though, where do they go?

Enter ETFtracker, a free resource created by the team at OpenInsight. ETFtracker provides an interactive way to analyse the ASX and Chi-X ETP data and provides regular market updates as well as a weekly newsletter and podcast. They have used their data and technology skills to make the processing and visualisation of investment data more efficient and easier to use and with ETFtracker they help educate investors with data-driven insights. Additionally, they have holdings analysis tools which allow for easier comparisons across iShares, BetaShares and State Street ETFs currently.

ETFtracker is used to provide regular market updates and below we take a look at some of the recent insights this tool has found.

The overall trends in the market to date show that the pace of growth of ETFs accelerating compared with previous years.  Total funds under management (FUM) grew to $115.7 billion as of June 2021. This means that FY21 growth is 76% higher than a year ago whilst FY18 to FY20 only grew at about 30% each year, proving just how popular ETFs are getting since they launched in Australia 20 years ago in August of 2001.

The most money during this time has gone to Equity ETFs especially Australian and Global (ex Asia and Emerging Markets). These 2 groups made up 74% of total market assets under management. The average amount of money (Net Inflows) each month going into the ETF markets sits at $1.6 billion in 2021. This was $1.1 billion in 2019 and “only” $500 million in 2018.

The best performing ETFs over the last 12 months to June 2021 were GGUS (BetaShare Geared US Equity) which saw +108% total monthly returns. ACDC (ETF Securities Battery & Lithium) at +82% and another leveraged play LNAS (ETF Securities Ultra Long Nasdaq 100) at +79%

Ethical and sustainable ETFs have also been on the rise as this thematic sees new ETFs issued (most recently with IESG from iShares and ERTH from BetaShares). There are now a total of 23 ETFs across ASX and Chi-X now controlling $4.7 billion of FUM. The biggest amongst them is ETHI which has just under $1.6 billion in assets and whilst greenwashing has become a topic of debate for this class of ETFs there are active managers like eInvest and their Better Future ETF (IMPQ) which has even won awards.

Looking into the crystal ball and it’s likely we’ll see more ETF megatrends with long-dated themes playing out for investors. According to Kanish Chugh from ETF Securities (in this Livewire Markets article) these include healthcare, transformative technology, society and lifestyle and environment and resources. Digging deeper into these themes you can find specific plays like automation where their ROBO ETF plays a significant role with the stocks it holds.

We also saw more closed ended funds turn into ETFs (and actively managed) with the latest coming from Monash. The others include Magellan, Loftus Peak, Hyperion and Airlie and their addition added significant weight to the overall size of the market. This is likely to continue as further support for active ETFs grows overseas (in the US this year so far there are 156 active ETF launches compared to just 77 passive ones according to Bloomberg). Locally too there is more support as proponents of ETFs see the ability for both to exist in a portfolio (per this article from the AFR).

There’s a whole lot more analysis that can be done with the data and thanks to those who are crunching the numbers like OpenInsight, there’s no doubt we will keep seeing this.

For anyone looking to explore insights like this themselves, they can do so by accessing the ETFtracker app and resources for free at www.etftracker.com.au. The team data and technology team at OpenInsight have also created a range of research and portfolio management tools and can be contacted here www.openinsight.com.au