Records were broken once again in August, with more than $2 billion of inflows taking the ETFs sector to a new high.
The value of funds under management across Australia’s exchange traded funds (ETFs) sector surged through $150 billion for the first time in August, fuelled by investor inflows and market gains.
Australian Securities Exchange (ASX) data released on 12 September shows total ETF funds under management reached $151.83 billion at 31 August, up from $149.41 billion at the end of July.
The total size of Australia’s ETFs sector measured by funds under management has increased by more than $20 billion, or 16.4%, just since the start of 2023. ETF funds under management at 31 December 2022 totalled $130.44 billion.
ETFs are continuing to gain popularity among investors seeking out listed products that provide a quick and low-cost exposure to a broad range of listed companies, specific regions, asset classes and thematic strategies via a single market trade.
Strong inflows into Australian large cap ETFs
Key highlights for August included more than $1 billion of investment inflows into Australian equity ETFs that invest in the largest ASX companies by market capitalisation.
This segment of the Australian ETFs market accounted for $29.47 billion of investment assets, equating to about 19.4% of total ETF assets.
The Vanguard Australian Shares Index ETF (VAS), which invests in the 300 largest ASX companies, received the highest ETF inflows, totalling more than $517 million in August. VAS also remained Australia’s biggest ETF with more than $12.9 billion of investment funds under management.
Meanwhile, ETFs than invest in equities listed outside of Australia recorded net outflows of $56.55 million in August. The biggest outflows were in ETFs covering Asia and emerging markets.
However, in the broader global equity ETFs segment, the Vanguard MSCI Index International Shares ETF (VGS) achieved strong inflows totalling $103.07 million. This took VGS’s total funds under management to $6.45 billion. The August inflows for VGS were also the highest of all the ASX-listed ETFs that focus on international equity securities.
Bond ETFs continue to attract strong inflows
The ongoing attraction of higher interest rate returns spurred more than $600 million of investment inflows into fixed income ETFs during August.
Australian bonds ETFs received $459.61 million of inflows, which was only slightly lower than the $461.71 million of inflows recorded in July.
ETFs that invest in international bond issues attracted $146.85 million of inflows in August, well above the $89.61 million of inflows recorded in July.
Since the start of 2023 investors have channelled more than $2.61 billion in Australian bonds ETFs and over $1 billion into international bonds ETFs.
The latest monthly surge in total ETF inflows reflects the wide diversity of products now available to retail investors on the ASX.
According to the ASX Australian Investor Study 2023, one-in-five (20%) of the 7.7 million on-exchange investors in Australia now hold one or more ETFs compared to 15% of investors in 2020. This equates to around 1.54 million Australian investors.
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Important information and general advice warning
Vanguard Investments Australia Ltd (ABN 72 072 881 086 / AFS Licence 227263) is the product issuer of the Vanguard ETFs and the Operator of Vanguard Personal Investor. We have not taken your objectives, financial situation or needs into account when preparing this publication so it may not be applicable to the particular situation you are considering. You should consider your objectives, financial situation or needs, and the disclosure documents for Vanguard ETFs before making any investment decision. Before you make any financial decision regarding Vanguard ETFs , you should seek professional advice from a suitably qualified adviser. A copy of the Target Market Determinations (TMD) for Vanguard's financial products can be obtained at vanguard.com.au free of charge and include a description of who the financial product is appropriate for. You should refer to the TMD for Vanguard ETFs before making any investment decisions. You can access our IDPS Guide, PDSs Prospectus and TMD at vanguard.com.au or by calling 1300 655 101. Past performance information is given for illustrative purposes only and should not be relied upon as, and is not, an indication of future performance. This publication was prepared in good faith and we accept no liability for any errors or omissions.