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Australia’s ETF market outpacing rest of world
Australia’s Exchange Traded Fund (ETF) market is on track to double by end of next year according to Deborah Fuhr, BlackRock‘s Global Head of ETF Research and Implementation Strategy.
double by end of next year according to Deborah Fuhr, BlackRock‘s Global Head of ETF
Research and Implementation Strategy.
Speaking at a lunch in Sydney today, Ms Fuhr said investor demand for ETFs in Australia
and the Asia-Pacific region is now increasing at a faster pace than the rest of the world.
“The ETF industry in Australia has more than tripled over the last three years from AU$849
million assets in 2007 to AU$3.2 billion assets at the end of June 2010 and, consistent
with trends worldwide, we expect this growth to continue. As regulatory changes and new
products and providers enter the Australian market, ETFs are set become an ever more
important segment of investors’ portfolios,”
Tom Keenan, Director, iShares, said “The growth in Australia’s ETF market has been
largely driven by investor preference for transparency, liquidity and low-cost diversification.
Self managed superfund investors, both do-it-yourself and advised, continue to embrace
these benefits after emerging as the early adopters.”
“The challenging market conditions of 2008 caused a significant shift in investors’ risk
appetite in their evaluation of counterparty risk and their desire for liquidity and
transparency. During 2009 many investors turned to ETFs to help meet their desire for
better risk and return and price transparency,”
Ms Fuhr also added that Australia’s largest institutions are using ETFs for portfolio
completion, tactical adjustments and rebalancing, or to gain temporary market exposure
while transitioning assets from one external manager to another.
The ban on commissions for advisers in Australia from 2012 is also likely to further
increase the demand for ETFs according to Fuhr.
“The government’s proposed ban on commissions and volume-based rebates in 2012,
together with current moves by many financial planning groups to a non-commission
payment structure, should further encourage the momentum in ETFs,” Ms Fuhr
From a regional perspective, Ms Fuhr said, “Asia Pacific (ex-Japan) is also experiencing
fundamental growth with assets increasing by 22% over the last 12 months and the
number of ETFs available increasing by 34%.”
At the end of May 2010, the global ETF industry had 2,218 ETFs with 4,478 listings from
131 providers. By comparison Australia has 6 providers and 32 ETFs listed on the
Australian Securities Exchange (ASX).
Globally, iShares is the largest ETF provider in terms of both number of products, 442
ETFs, and assets of US$481.2 bn, reflecting 46.1% market share; State Street Global
Advisors is second with 110 products and US$149.0 bn, 14.3% market share; followed by
Vanguard with 47 products and assets of US$104.4 bn and 10.0% market share at the
end of May 2010.
Brian Mahoney, FCR – 0413 437 627
Erin Taylor, FCR – 0416 366 703
# # #
iShares Exchange Traded Funds are the world’s leading family of exchange traded funds (ETFs). Over
400 iShares are traded on major stock exchanges around the world and iShares accounts for close to half of
the ETF market worldwide.
ETFs are index funds that are bought and sold like ordinary shares on a stock exchange. They provide
instant exposure to an entire index through a single trade. ETFs combine the advantages of shares with the
benefits of index funds. iShares ETFs are attractive to individual and institutional investors and financial
intermediaries because of their trading flexibility, cost-effective diversification and transparency. iShares
ETFs can be used to achieve many investment strategies, such as completing a portfolio’s strategic asset
allocation, core-satellite investing and reducing portfolio risk through diversification.
For further information on iShares ETFs and strategies for using them, visit http://au.ishares.com/