Global share ETF growth exploded in 2015

Our update on the Australian ETF market as at January 2016.


  • Global share ETFs attracted the lions’ share of new funds & growth – over $3 billion in 2015.
  • Vanguard and BetaShares closed the gap on market leaders SPDR and iShares – highlighting that consumers are most focused on ETF pricing and unique product innovation.
  • Generally ‘smart beta’ ETFs underperformed the broad market ETFs – including 6 that underperformed by more than 5% over the 12 months.
  • UBS and Market Vectors were the only issuers whose Australian ‘smart beta’ ETFs beat the general market. As a result, both were able to grow FUM strongly over the year.
  • Magellan attracted over $400m into Australia’s first active exchange traded managed fund (ETMF). K2 have followed the lead set by Magellan by launching their own ETMF.
  • Global equity ETFs achieved the best annual returns of all sectors and have performed strongly over 1, 3 and 5 years. 1 year fund flows exhibit a strong correlation with trailing 5 year returns.


Exchange Traded Funds (ETFs) listed in the ASX recorded strong inflows of $6.3 billion in 2015 or 42% growth. All ETF sectors apart from commodities increased their funds under management (FUM) for the year. Investors continued to add the majority of new money into international share ETFs, which outperformed Australian share ETFs for a fifth year. The number of ETFs grew to 138 from 104 a year earlier.

Sector Number of products Total FUM
Dec 2015 ($M)
Annual change in FUM
Global Shares (broad market) 49 8,064 52%
Australian Shares (broad market) 15 6,203 38%
Australian Shares (strategies) 16 2,091 27%
Fixed Income and Cash 16 1,883 42%
Australian Shares (sectors) 10 1,305 36%
Global Shares (sectors) 5 697 96%
Commodity 22 577 -1%
Currency 5 516 59%
Total 138 21,335 42%

Source: ASX


Vanguard performed strongly, recording 69% FUM growth for the year compared to the other two leaders, SPDR and iShares which grew 28% and 32% respectively. Investors continue to be attracted to Vanguards relatively lower fees. This has put pressure on some of the other issuers to improve the competitiveness of their fees. In December, Australia’s largest ETF, the SPDR S&P ASX/200 Australian share fund lowered fees from 0.286% to 0.19% which highlights the fee pressure starting to emerge.

While the top three issuers still account for over 80% of FUM, the smaller new entrants have also attracted large percentage increases in funds this year. BetaShares still leads the rest of the pack by focusing on popular strategies like dividends and cash. UBS and Market Vectors attracted $118M and $205M of new funds respectively. ANZ became the newest entrant in May with six new ETFs but struggled to gain early traction, accumulating just $17M in 7 months, despite its giant brand and broad distribution network.

Issuer Total FUM
Dec 2014 ($M)
Total FUM
Dec 2015 ($M)
Annual change in FUM
iShares 5,464 7,196 32%
SPDR 3,806 4,924 28%
Vanguard 2,620 4,748 69%
BetaShares 1,586 2,285 44%
Russell 579 642 11%
ETF Securities 501 439 -12%
UBS 63 181 189%
Magellan 456
Market Vectors 76 281 269%
Perth Mint 54 79 48%
Aurora 23 16 -32%
ANZ 17
K2 72
Total 15,103 21,335 42%

Source: ASX

Best and worst performers

Global shares and listed property ETFs generated the best returns for the year, partially due to the fall in the Australian dollar, which benefited those investing overseas. iShares’ growth was supported by the popularity of global ETFs, where it dominates with the majority of products.

The worst performing ETFs of 2015 were all from the commodities space, showcasing the significant decline in commodity prices – particularly oil and natural gas. Fortunately many of the commodity-based ETFs only have small investor bases so the total value lost has been relatively small despite large percentage falls in the range of -30% to -50%.

ASX code ETF name Total FUM
Dec 2015 ($M)
1 year total return
Positive performance
IJP iShares MSCI Japan 208 20%
IXI iShares S&P Global Consumer Staples 152 19%
IXJ iShares S&P Global Healthcare 437 19%
QUAL Market Vectors MSCI World Ex-Australia Quality ETF 81 16%
SLF SPDR S&P/ASX 200 Listed Property Fund 599 15%
Negative performance
ETPNRG ETFS Energy (collateralised structured product) 0.1 -54%
OOO BetaShares Crude Oil Index ETF-Currency Hedged (Synthetic) 31 -47%
ETPGAS ETFS Natural Gas (collateralised structured product) 0.2 -45%
ETPOIL ETFS Brent Crude (collateralised structured product) 1 -39%
QCB BetaShares Commodities Basket ETF-Currency Hedged (Synthetic) 8 -27%

Increases and decreases in FUM

The largest dollar increases in new money were spread across the broad Australian share ETFs (STW and VAS), fixed interest and cash (IAF and AAA) and Magellan’s active managed fund (MGE). The global and US share ETFs that featured in our 2015 ETF Report with the largest FUM increases (IVV, IOO, VTS), all saw FUM growth slow as US share market returns moderated.

Source: ASX

Negative price performance impacted this year’s biggest FUM outflows, which were focused across commodities (GOLD), Chinese shares (IZZ), Emerging markets (IEM), and small Australian shares (ISO).

Source: ASX

‘Smart beta’ lags the broad market

Only 3 ‘smart beta’ strategy ETFs outperformed the Vanguard index ETF (VAS) for the year whereas 10 generated inferior performance, including 6 that underperformed by more than 5%.

ASX code Fund type ETF name 1 year total return
AOD Managed Fund Aurora Dividend Income Trust -10.42%
RVL ETF Russell Australian Value ETF -4.73%
HVST Managed Fund BetaShares Australian Dividend Harvestor Fund (Managed Fund) -4.12%
VHY ETF Vanguard Australian Shares High Yield ETF -3.98%
YMAX Managed Fund BetaShares Australia Top20 Equity Yield Max Fund -3.90%
IHD ETF iShares S&P/ASX High Dividend Yield -2.09%
SYI ETF SPDR MSCI Australia Select High Dividend Yield Fund -1.73%
GEAR MF BetaShares Geared Australian Equity Fund (Hedge Fund) -1.23%
QOZ ETF BetaShares FTSE RAFI Australia 200 ETF -0.34%
RDV ETF Russell High Dividend Australian Shares ETF 2.18%
VAS ETF Vanguard Australian Shares ETF
(Broad market Stockspot inclusion)
ETF ETF UBS IQ Research Preferred Australian Share Fund 3.05%
DIV ETF UBS IQ Research Preferred Australian Dividend Fund 3.37%
MVW ETF Market Vectors Australian Equal Weight ETF 5.24%

The two UBS ‘smart beta’ research ETFs that beat VAS in 2015 had underperformed over the previous 2 years so are by no means consistent performers.

We wrote recently about some of the risks we see with the new wave of smart beta ETFs and our position appears justified given their generally lackluster performance.

Fund flows versus 5-year returns

Source: ASX

There has been a strong correlation between new FUM flows and trailing 5-year returns. For better or worse, investors tend to chase recent performance. This has led to growing demand for international share ETFs and yield-focused ETFs including property and fixed interest since returns have been strong over the recent past. Conversely, commodity ETFs have seen slowing inflows as commodity prices enter their fifth year of declines.

For full details, download our January 2016 ETF update.

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Exchange trade fund (ETF): An open-ended investment fund that is traded on a stock-exchange. ETFs provide direct exposure to a wide range of investments in their asset class such as Australian shares, international shares, bonds or metals.

Broad market ETFs: Track the widest range of securities in the market that has been selected.

Sector ETFs: Track sectors within a market. (e.g. property, financials or resources)

Strategy ETFs: Only include some securities in the market. Securities are selected according to certain rule-based factors (e.g. dividend yield or research rating)

Exchange Traded Managed Fund (ETMF): These securities trade on the ASX like an ETF, but the funds are actively managed by the issuer instead of passively tracking a rules-based index.

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Chris Brycki

Stockspot Founder and CEO

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