Stockspot has been researching ETFs and managing diversified ETF portfolios for clients since 2014. We are ETF advocates because ETFs offer instant diversification, low costs, transparency, and ease of access.
Our 2021 ETF Report compares over 200+ ASX listed ETFs and looks at how Australians are investing in them. Here are 10 key research highlights.
1. ETFs had their strongest growth in over a decade with funds under management (FUM) growing by 79% over the last year.
The ETF market in Australia is currently worth approximately $102 billion, with 27 new ETF launches. This takes the total number of products available on the ASX to 220.
2. In a year where technology was ubiquitous, technology related ETFs delivered the best performance.
The ETFS Battery Tech & Lithium ETF (ASX: ACDC) took out top spot this year with a 96% return over the last 12 months. But remember, last year’s winners won’t necessarily perform next year, so we’ll be keeping a close eye on this in 2022.
3. Specialised products like inverse ETFs and currency ETFs performed poorly.
ETFs that are designed to profit from a decline in a tracked index are risky investments, with the BetaShares Australian Equities Bear (Hedge Fund) (ASX: BEAR) returning the worst result, down over -30% for the year.
4. Investors continue to favour broad based Australian and U.S. ETFs.
Vanguard Australian Shares Index (ASX: VAS) continues to be widely popular with Australian investors (and sits within the Stockspot portfolios). ETFs that gave investors exposure to U.S markets were also popular.
5. There’s been a 400+% rise in thematic ETFs.
These ETFs invest in particular market grouping or trends and target areas or sectors they believe have an opportunity for significant growth. But there’s a catch. Find out more in our 2021 ETF Report.
6. ETFs save Australian investors half a billion dollars per year in fees.
In just one year, Australian investors have saved $500 million in fees compared to using expensive fund managers.
7. A lesson in greenwashing – how sustainable is your sustainable ETF?
Sustainable ETFs grew by 125% over the past year, and there is now $3.3 billion in sustainable ETFs on the ASX. Unfortunately, investors need to be aware of something called ‘greenwashing’ and question how sustainable their ETF really is.
8. Active fund managers turning to ETFs.
Some active fund managers have converted their funds into ETFs and taken a greater share of the Australian ETF market.
9. Cash ETFs slowing down while commodity-related ETFs gain more popularity.
Commodity ETFs (including gold, silver, platinum, palladium and oil) have grown 37% p.a over the last five years. Cash ETFs, on the other hand, have only grown 24% p.a.
10. 63% of money invested in ETFs has flowed into new ETFs (launched in the past five years).
New ETFs tend to be darlings of the market for a while – but there are things you should be wary of, including being cynical of ETF issuer marketing.