VanEck forecasts Australia’s ETF market will hit A$180bn in 2024

Australians’ love for exchange traded funds this year shows no signs of abating, with that market predicted to reach A$180bn ($118bn) in 2024, according to a new report.

Nearly 60 per cent of investors in the country are aiming to lift their allocation to or make their initial investment in the products during next year’s first half, asset manager VanEck reveals in its annual investor survey, which was conducted in November. Half of investors plan to make ETFs a greater share of their self-managed super fund portfolios.

“We see the ETF market in Australia reaching A$180bn by the end of 2024,” said Arian Neiron, chief executive and managing director at VanEck Asia Pacific.

The survey also found that Australian stocks are popular, with 65 per cent planning to invest in shares next year, while 50 per cent of investors aim to tap into foreign shares.

This article was previously published by Ignites Asia, a title owned by the FT Group.

ETFs also prevailed as the most preferred investment in 2023 by over 50 per cent of respondents, with 35 per cent of investors choosing shares and only 3 per cent favouring unlisted/actively managed funds.

An overwhelming 84 per cent of respondents also said they would recommend ETFs to other investors. An even higher number of respondents, over 90 per cent, said they currently had at least one ETF in their portfolios.

Technology and healthcare reign as the top sectors for investors next year, with nearly 50 per cent and 40 per cent noting that they were thinking of tapping into the tech space and in healthcare companies respectively.

The survey also reveals that 74 per cent of investors will not consider environmental, social and governance funds next year.

“This year has further shown the resilience and popularity of ETFs, as well as the decline in actively managed funds,” Neiron said. “While the economic turbulence of 2023 is likely to continue into 2024, it’s clear that investors are still seeking opportunities and are confident in the long-term benefits of investing in ETFs.”

Retail investors have been fuelling the ETF boom in the country.

The number of retail investors in Australia’s ETF market has surged by 230 per cent since 2020. Retail investors now make up the majority of domestic ETF buyers but hold just 11.5 per cent of total assets in the sector, according to new research from Computershare.

Australia is one of the fastest-growing ETF markets in the world, with over 220 ETFs across a broad range of asset classes and over A$148bn in assets as of September 30, according to ASX data.

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The five largest managers in the sector — Vanguard, Betashares, BlackRock’s iShares, Van Eck and State Street Global Advisors — have all announced fee cuts for numerous equities and bond ETFs in the market over the past year.

And Mirae Asset’s Global X Investments, the country’s seventh-largest issuer, just last week jumped into the mounting price war with fee reductions for two bond ETFs.

The findings of this report are also in line with Betashares’ own forecasts of accelerating growth for the Australian ETF market.

*Ignites Asia is a news service published by FT Specialist for professionals working in the asset management industry. Trials and subscriptions are available at ignitesasia.com.