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Morningstar runs the numbers

Lewis Jackson  |  19 Apr 2021Text size  Decrease  Increase  |  
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$1.5 billion

The Australian ETF sector continues to grow amidst a come-back for value style investing writes Morningstar’s Emma Rapaport. “The industry has added around $8 billion in the first quarter of 2021 bringing total assets under management to an all-time high of $102.9 billion.”

“On a firm level, Vanguard attracted the highest flows year to date, capturing $1.5 billion – or 24.38 per cent of the industry. BetaShares followed closely behind, pulling in $1 billion (23.13 per cent). Global investing powerhouse Magellan faltered with outflows of $87.7 million from its funds this year.”

30 years

“For retirees who aspire to financial independence, the task is complex. Without careful planning, retirees are likely to outlive their savings,” writes Jon Kalkman.

“We know that 50 per cent of males currently aged 65 will survive beyond age 84, but around 5 per cent of that group will survive beyond age 97. Similarly, 50 per cent of females currently aged 65, will survive beyond age 88, but around 5 per cent of that group will survive beyond age 100. Some individuals will survive even longer.

“Therefore, if independent retirees wish to plan their retirement with a 95 per cent certainty that they will not outlive their money, they need to plan for a retirement of at least 30 years.”

13th

Trillions of dollars are being promised for infrastructure in the United States, but it will not be enough to close the gap with China according to Peter Warnes.

“The Biden administration is embarking on a US$2.25 trillion American Jobs Plan, which will include spending upwards of US$700bn on repairing decaying 20th century infrastructure, but it will still not be enough, China boasts 21st century infrastructure and it will take the US years, perhaps a decade, to bridge the gap. The US ranks a poor 13th in terms of overall quality of infrastructure despite being the world’s wealthiest economy.”

423.61 per cent

ETFS Battery Tech and Lithium ETF ACDC was the best performing ETF of 2020, returning 62.24 per cent last year. That outstanding return was driven by several star performers writes Lewis Jackson.

“Ten firms out of the fund’s 31 had a cumulative return of over 100 per cent. Automakers Tesla and BYD returned 743.44 per cent and 423.61 per cent respectively. Solar panel maker Solaredge, Pilbara Minerals, and battery maker Tianneng Power International each returned over 200 per cent. On the other end, the fund had 10 holdings with negative returns. Toshiba Corp, chemical firm Showa Denko KK, and power generation equipment firm Aggreko PLC all lost more than 20 per cent.”

25 per cent

The spectacular growth of index funds has attracted concern and criticism about their influence on markets and corporate governance. John Rekenthaler lays out the arguments before pointing out how they miss the mark.

“One criticism is that index funds are unduly powerful. Lowrey quotes a Harvard professor, John Coates, who notes that Vanguard, BlackRock, and State Street collectively hold an average of 17 per cent of large US companies--a figure that understates indexers' power because many shareholders do not vote. Effectively, says Coates, the three firms control 25 per cent of the vote in company elections.”

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is a reporter/data journalist for Morningstar. You can follow Lewis on Twitter @lewjackk

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