Australian ETF industry to grow to $200 billion: VanEck retail investor survey reinforces ETFs as the go-to wealth strategy approach
Retail investors are increasingly using exchange traded funds (ETFs) in their investment portfolios, with most planning to boost their use of ETFs over the next six months, according to a new survey…
Sydney, 07 September 2021 – Retail investors are increasingly using exchange traded funds (ETFs) in their investment portfolios, with most planning to boost their use of ETFs over the next six months, according to a new survey of retail investors conducted by VanEck.
The survey is the largest retail investor survey of its kind in Australia in 2021 and captures the investment preferences of retail investors. The survey attracted 3,047 responses and was conducted from March to July 2021. The highest number of responses were from millennials, with those over 60 representing the second largest demographic.
Arian Neiron, CEO & Managing Director – VanEck Asia Pacific, said: "Self-directed or retail investors are flocking to ETFs to get access to a plethora of investment opportunities on ASX. The survey revealed 96% of respondents now use ETFs in their portfolios, while 67% of respondents said they planned to increase their investment in ETFs over the next six months.
“Another 31% said they would maintain their current investment in ETFs while less than 1% said they would reduce their investment - highlighting the entrenched appeal of ETFs versus unlisted managed funds. Self-directed Australian investors see ETFs as a portfolio construction tool for a range of wealth management outcomes. And as their understanding of ETFs deepens, including their understanding of investment strategy types such as smart beta, net flows into the industry are increasing quickly,” Neiron said.
“Also reflecting their strong appeal, 89% of respondents said they would recommend ETFs to other investors, reinforcing that ETFs are the topic du jour when talking investments. The expected increase in usage will drive further growth of the ETF market in Australia as it heads towards a market capitalisation of $140 billion by end of 2021 and $200 billion in the next two years,” he said.
“Only 6% of respondents said they did not invest in ETFs because they prefer to invest in managed funds or other investment products. Fees, transparency and performance outcomes are facilitating the exponential growth of the Australian ETF industry,” Neiron said. Most of the reluctance to invest in ETFs stemmed from not knowing enough about them, with 42% of respondents who don’t use them giving this as the reason why.
“As knowledge of ETFs grows, and their benefits, flows into the sector are expected to maintain their momentum. With this growth, we have seen the range of ETFs develop from simple market capitalisation index-tracking ETFs to smart beta ETFs to active ETFs. Popular investment themes such as ESG, clean energy and video gaming are drawing in the younger demographic and those investors who want to align their values with their portfolio,” he said.
Around two-thirds of the respondents are investing directly, with around one in three having a self-managed superannuation fund (SMSF). Most of the respondents or 71% do not use a financial advisor with the principal reason being they do not see any value in it (43%), and cost (21%), highlighting the trend towards self-directed investment.
Founded in 1955 and based in New York, VanEck is one of the largest providers of ETFs in the world and in Australia.
“VanEck is committed to educating investors and advisers about the types and range of ETFs and the respective investment opportunities. Be it market beta, smart beta or active strategies ETFs offer a premium investor experience given the price discovery throughout the ASX trading day, generally lower fees, transparency, and the range of asset classes and market segments on offer,” Neiron said.
VanEck is one of the world’s largest issuers of ETFs (Exchange Traded Funds), managing in excess of US$75 billion globally for individual and institutional investors. Founded in New York in 1955, VanEck is a pioneer in international investing and in gold funds, launching the first gold equities fund and the first gold ETF in the US.
In Australia, VanEck is one of the largest ETF providers in Australia and the world and is the premier leader in ‘smart beta’ investment strategies. We have 29 ETFs on ASX that focus on delivering superior performance through beyond-the-usual approaches and providing access to asset classes typically unavailable to Australian investors.
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