We first took a look at the ETFs which had the highest inflows for the financial year this time last year. With the end of financial year long behind us, it’s time to take another look and see if there were any changes from last year.
One of the unique attributes of Exchange Traded Funds (ETFs) and one which they share with managed funds, is their ability to create new units. This means that theoretically there is no limit to the size that an ETF can get to. Below we have a look at which ETFs had the highest net inflows last financial year to see where investors have been placing their money. In another big year for ETFs, the segment added $5.2 billion in new inflows, growing by over 30% including inflows and growth from the previous year and closing the financial year just short of $30 billion in total funds.
|Fund Name||Ticker||FY 2017 Inflow||FY 2016 Inflow|
|Betashares Australian High Interest Cash ETF||AAA||$340.4m||$199.7m|
|SPDR S&P/ASX 200 Fund||STW||$295.04m||$188.7m|
|BetaShares Australian Dividend Harvester Fund (Managed Fund)||HVST||$277.27m||$111.2m|
|Vanguard Australian Property Securities Index ETF||VAP||$263.45m||$196.9m|
|Vanguard Australian Shares Index||VAS||$243.05m||$499.5m|
|Vanguard Australian Fixed Interest Index||VAF||$238.58m||$208.2m|
|Magellan Global Equities Fund||MGE||$215.7m||$370.7m|
|Vanguard MSCI Index International Series||VGS||$208.11m||$231.4m|
|iShares S&P/ASX 200 ETF||IOZ||$206.84m||$106.2m|
|Vanguard Australian Shares High Yield ETF||VHY||$152.69m||$164.4m|
|Vanguard All-World EX US Shares Index||VEU||$152.54m||$166.2m|
|BetaShares FTSE RAFI Australia 200 ETF||QOZ||$146.42m||$35.2m|
|Vanguard MSCI Index International Series (Hedged)||VGAD||$121.9m||$72.7m|
|VanEck Vectors Australian Equal Weight ETF||MVW||$117.99m||$85.3m|
|iShares UBS Composite Bond ETF||IAF||$107.1m||$119.8m|
|VanEck Vectors MSCI World Ex-Australia ETF||QUAL||$102.37m||$62.1m|
|ETFS Physical Gold||GOLD||$95.72m||$62.9m|
|Vanguard International Credit Securities Index (Hedged) ETF||VCF||$91.7m||$11.5m|
|Vanguard International Fixed Interest (Hedged) ETF||VIF||$88.86m||$18.6m|
|Magellan Infrastructure Fund (Currency Hedged) (Managed Fund)||MICH||$81.1m||$0.0m|
Last year’s top 20 included 8 Vanguard funds, this year includes 9. Vanguard is by far the most popular ETF provider and for good reason. The appeal to many investors of ETFs is their low cost, and Vanguard tends to offer the lowest cost options in most segments. In fact, as Vanguard gets bigger and bigger they continue to reduce their fees, with fee cuts in many of its ETFs this last year.
In FY 2016, Vanguard’s Australian Share ETF (VAS) was the clear winner in net inflows across all ETFs, however the older and larger SPDR S&P ASX 200 fund (STW) has regained their mantle as the most popular Australian shares ETF, exceeding Vanguard in flows by about $50m in the last year. Last year STW changed their distributions from bi-annual to quarterly, matching VAS, which may be partly to do with their resurgence. They also tend to offer a lower bid/ask spread than VAS. You can take a look at all the differences in a post on STW, VAS & IOZ from last year.
For a long time Betashares had a nice monopoly in cash ETFs, with their AAA fund the only cash ETF on the ASX. The fund was the top inflow ETF last financial year, recording $340m in new inflows. Not surprisingly, their competitors have noticed, and now a large selection of cash ETFs are available to investors. Our recent post on this topic outlines what’s now available.
Market commentators often quote Australians high allocation to Australian shares, with the usual comments along the line of the Australian market only accounting for 3% of global sharemarkets. It seems a growing number of investors are using ETFs to access global exposure, as well as other asset classes such as cash, fixed interest, property and infrastructure. In fact if the $5.2m of new flows were to be plotted in a standard asset allocation chart, it would look like the below, with Australian equities accounting for 35% of flows and the total allocation looking remarkably similar to the ‘balanced’ portfolio in our lowest cost ETF portfolio we previously covered.
Pareto’s principle, more commonly known as the 80/20 rule is in full effect in the ETF market. The top 20 ETFs which equate to just 12% of all ETFs (162 in total), accounted for a whopping 68% of total flows to ETFs. The top 20% of ETFs equated to 82% of volumes. The bottom 50% of ETFs by flow contributed nothing to total inflows, with 24 ETFs recording net outflows. Whilst the size of the ETF market has grown hugely in the last few years, this statistic shows there are a reasonably small amount of ETFs capitalising on the growth.
We hope this post provided some nice insights on investor behaviour in the ETF space. Where do you think the trends will head for the next financial year?