Australian Exchange Traded Fund (ETF) leader, BetaShares, is predicting 2019 to be a “blockbuster” year for the industry.
In November 2018, the local ETF industry held $41.1 billion, which was $5.6 billion or 13% higher than a year earlier.
For context, the Australian ASX 200 total return index, which includes both dividends and share price growth and represents the ‘growth in the overall market’, rose about 2% in that time.
Why ETFs Are Surging
According to BetaShares’ co-founder and Head of Strategy, Ilan Israelstam, more investors are taking advantage of the simplicity and low costs that ETFs provide.
“More investors appear to be recognising the benefits of ETFs, including the ability to diversify portfolios, lower costs and access opportunities in international sectors which have historically been hard for Australians to access,” Israelstam says.
In the year ahead, BetaShares expects more ‘passive’ ETF model portfolios to be adopted and combined with active investing.
“It is becoming increasingly understood in the Australian market that the combination of low-cost index building blocks and active asset allocation can result in a compelling investment solution that delivers value for both the end client and the adviser, and so we predict this theme to grow strongly.”
Israelstam expects ‘themes’ and fixed income ETFs to continue to grow in popularity as investors seek differentiated exposure to unique businesses and assets.
“We predict the ETF industry to end 2019 at $55-60 billion, vs. $41B as at November 2018,” Israelstam concluded.