The fifth edition of our annual Australian ETF Research is now live.
Stockspot undertakes this objective, independent review of the ETF landscape to ensure we include the right ETFs in our portfolios. We also want to raise the awareness and understanding of ETFs in Australia, which is why we share our research for free.
We’ve been advocates of low-cost index ETFs since 2014 when we launched Australia’s first – and still largest – online investment advice service.
Why do we love ETFs? They have lower costs and better diversification as well as the added benefits of transparency, liquidity and tax efficiency. And last but not least, they deliver good returns.
Our Stockspot ETF portfolios now have a 5 year track record of consistent performance. We hope you find our ETF research educational and valuable as part of your investing journey.
ETF Market Update
- Market summary
- 10 key numbers and highlights
- Australian vs global ETF market
- ETF sectors
- ETF issuers
- New ETFs
- Closed ETFs
- Best performing ETFs for 2019
- Worst performing ETFs for 2019
- Most popular ETFs
- Least popular ETFs
ETF Investing Tips
Global Share ETFs
Smart Beta ETFs
ETF Performance Tables
- Australian share ETFs
- Global share ETFs
- Bonds, fixed income and cash ETFs
- Ethical ETFs
- Other ETFs (currency, commodities etc…)
- The Australian ETF market grew 26% over the past year to $45.8 billion in March 2019. Stockspot predicts that ETF FUM will hit $100b by 2022 driven by the combination of Australians having an increased focus on fees and transparency of their investments, continual underperformance of active funds, regulatory change around best interest duty, a shift in brokerage and advice models, product innovation and increased financial awareness of asset class diversification.
- The best performing ETF over the last year was the ETFS Physical Palladium (ETPMPD) returning 52.4% as the demand for this precious metal continues to grow. Active ETFs struggled with the K2 Australian Small Cap Fund (KSM) taking the crown for the worst performing ETF (excluding leveraged ETFs) returning -14.3%.
- ETFs are saving Australians over $300m per year in fees compared to active fund managers who typically charge 1% p.a. Sadly many advisers still recommend high cost active investing strategies despite the overwhelming evidence that low cost index ETFs are in the best interest of clients based on their diversification benefits and performance.
- Bond ETFs attracted almost a third of all new money into ETFs last year, almost doubling its FUM. Bonds were one of the few asset classes that performed well in 2018, serving their purpose as counterbalances when shares fell, and have also benefited from recent interest rate falls.
- Vanguard and iShares continue to dominate the ETF market in Australia. Combined, they account for 56% of all money invested in ETFs. This year BetaShares knocked off SPDR to become Australia’s 3rd largest ETF issuer.
- Despite ETFs putting increased fee pressure on active funds, average ETF fees in Australia have been increasing over the past few years, primarily due to higher cost active ETFs and new sexy smart beta ETFs coming to market.
- Australian share ETFs charging less than 50bps (basis points) in fees had double the returns of ETFs charging more than 50bps over the last 5 years. Low cost ETFs returned 7.2% p.a. vs expensive ETFs which returned 2.9% p.a. This is one of the reasons Stockspot continues to focus on using low cost index ETFs and avoids expensive active fund products.
- The 5 most common mistakes that DIY investors make when using ETFs include trying to time the market, listening to short term media news, not paying attention to asset allocation within their portfolio, not doing due diligence on ETF products and bad trading practices.
- Australians have a home country bias choosing to invest in our own backyard with 75% of investors choosing to hold only Australian shares, yet the Australian market only makes up 2% of the global market. Global share ETFs are becoming increasingly popular as Aussies realise they need to diversify and reduce their reliance on the local economy, with $21b now in global share ETFs vs $17b in Australian share ETFs. Aussies now have access to ~100 global share ETFs, with 17 out of the 24 new ETFs launched over the last year being Global Share ETFs.
- The ETF industry surpassed the LIC market for the first time in September 2018. The first LIC was launched 65 years before the first ETF was launched in 2001. ETF, at the tender age of just 18, beat the 82 year old LIC! ETFs are superpassing LICs due to their lower costs, greater tax efficiency, better transparency, no conflicted remuneration and not trading at a premium/discount to their true value.
- Ethical ETFs continue to gain popularity, increasing 69% to almost $1b in FUM in March 2019. ETF uptake in ethical products has continued due to perceived outperformance, investors preference for ‘impact investing’, and moral and ethical values being a more important consideration when choosing investments. Ethical ETFs provide a ‘feel good’ alternative to investing in the broad market, however we believe investors should consider the extra costs and risks, and that performance may be driven by their tilts to different market sectors (like technology and financials), rather than the underlying ethical factors.
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