Aussie ETF investors look onshore amid global volatility
Australian equity ETFs attracted record inflows of $3.2 billion in 1Q25, while heightened volatility led to a decline in flows for global equity ETFs.
Data released by Vanguard and the ASX showed the Australian ETF industry fell from a high of $250 billion in assets under management (AUM) at the end of January to $241.9 billion at the end of March, as a result of recent market declines.
Total inflows for the March quarter were just over $11 billion, Vanguard noted, with international equity products capturing the largest share of inflows at $3.9 billion. However, this was down from $4.6 billion in the previous quarter.
Meanwhile, domestic equity ETFs enjoyed a record $3.2 billion this quarter – up from $2.3 billion – as many investors raised their exposure to the top ASX companies.
Daniel Shrimski, managing director of Vanguard Investments Australia, said there are now more than $2.2 billion Australians investing in ETFs through the ASX, a figure that continues to rise each month.
“While global financial markets are currently experiencing heightened volatility, the Australian ETFs industry is continuing to see ongoing growth in the number of investors wanting to use exchange-traded funds in their portfolios,” he commented.
“History shows that it’s time in the market, not trying to time markets, and broad diversification across sectors, asset classes, and markets that create a steadier path for investors to achieve long-term financial success.”
Defensive assets, including cash and commodity ETFs, saw notable growth in the three-month period, with the former climbing from $228 million to $869 million in inflows and the latter rising from $37 million to $683 million.
The Vanguard data highlighted that over 70 per cent of Australian financial advisers are harnessing diversified ETFs as a core offering to their client base.
Shrimski added: “Industry research shows that a growing number of younger investors are adopting ETFs alongside high-net-worth investors, self-managed super fund trustees and financial advisers.
“Portfolio diversification and the ability to gain exposure to specific asset classes, including overseas markets, remain the primary drivers for individual investors and advisers alike.”
The $16.7 trillion investment manager announced the launch of two diversified ETFs last month: the Vanguard Diversified All Growth Index ETF (VDAL) and the Vanguard Diversified Income ETF (VDIF).
Beyond local and international equity funds, Australian fixed income ETFs recorded inflows of $1.4 billion throughout the March quarter, slightly lower than the $1.7 billion seen in the December quarter. International fixed income products saw $558 million in inflows, compared to $419 million over the previous quarter.
AUTHOR
Jasmine Siljic
Recommended for you
High-net-worth investors and family offices are sustaining the rising demand for private equity investments, Schroders has unpacked, offering less volatility and the potential for higher returns.
The $13 billion ethical investment manager has named its new head of equities, who previously spent 12 years at Perpetual.
Magellan Financial Group has reported a consecutive monthly AUM increase for only the second time in the FY24–25 financial year.
Reacting to ASIC’s public and private markets discussion paper, research houses BondAdviser and SQM Research have detailed how they believe investors can be better protected from the risks of these funds.
