Whilst 2015 was a short year for us at ETF Watch (we only launched in November), it was nothing short of huge for the Australian market. 2015 saw 35 new ETFs and 11 new LICs launched.
Whilst 2015 was a short year for us at ETF Watch (we only launched in November), it was nothing short of huge for the Australian market. 2015 saw 35 new ETFs and 11 new LICs launched. The growth in ETFs in particular was huge, with the 35 new listings seeing the available ETFs available on the ASX grow by around 35%. The market cap of ETFs in Australia grew by around 40% and now sits at more than $20b.
Up until this year, the local big banks had steered clear of ETFs. This changed in June 2015 when ANZ with a partnership with ETFS launched 6 ETFs. To date growth has been lacklustre with the cumulative market cap for ANZ’s offerings being only $14m, so it will be interesting to see if any of the other banks get involved in 2016. 2015 also saw UBS get involved in the Australian market launching 6 ETFs themselves.
Magellan broke new ground this year by creating an ETF version of its $7 billion Magellan Global Fund. Technically not an ETF but an Exchange Traded Managed Fund (ETMF), here at ETF Watch we still call it an ETF. What made Magellan Global Equities Fund (MGE) so revolutionary was the way Magellan was able to navigate the disclosure requirements of ETFs by becoming its own Market Maker, ensuring the secrecy of the underlying investments could be somewhat retained with reporting of the portfolio only required on a quarterly basis. With a whopping $380m market cap this is without a doubt one of the success stories of the year, with Magellan announcing another fund to be launched in 2016, and plenty of the other large fund managers sure to be looking at similar listings. There are now a total of 12 ETFs listed on the ASX that we consider to be Actively Managed.
We discussed Smart Beta in a previous blog. Eight of this year’s new listings are classed by ETF Watch as Smart or Strategic Beta. Considering at the end of 2014 there were 12 Smart Beta ETFs (there are now 20), this is a significant growth. As it becomes difficult for a fund manager to compete on a traditional index with anything but lower fees, we’re expecting this part of the market to significantly grow.
With 11 new LICs listed in 2015, including from some big name fund managers such as Platinum, Argo, Perennial, Bennelong and the Future Generations conglomerate it’s fair to say that LICs are back with a vengeance. Whilst still dwarfed by the number of new ETF listings, the cumulative market cap of these 11 new LICs is almost $1.5 billion, which is nothing to be sneezed at. We’re expecting this to continue growing in 2016.
Whilst the numbers above make it look like our ETF market is getting big, when you consider that the global ETF market has over 6,000 funds worth a cumulative $3 trillion plus, the Australian market is still tiny. Here at ETF Watch we think 2016 is going to be even bigger. We’ll be back in the new year with our ear to the ground!