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Vanguard Australia narrows the ETF gap on iShares

Emma Rapaport  |  21 May 2018Text size  Decrease  Increase  |  
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Vanguard Australia is closing the gap in the battle for the title of Australia's largest ETF provider after pulling in close to $3 billion in net flows over the year.

Morningstar estimates* that Vanguard's Australian ETFs attracted $2.8 billion in the year to 31 March 2018, more than double the $1.3 billion gathered in the year to 31 March 2017.

3Q of 2017 was Vanguard's best. During that time it attracted $1.1 billion in new cash flows following the launch of a suite of multi-asset EFTs. Vanguard's four Diversified Index ETFs give investors access to diversification across and within all major asset classes in a single trade.

The record-breaking run has pushed Vanguard's ETF assets under management beyond $10 billion, closing the gap on rival iShares, which controls about $10.6 billion.

Commenting on the growth of Vanguard, Morningstar associate director manager research Alexander Prineas noted that in the early days of the Australian ETF market, iShares had a much broader range of global ETFs. However, products launched by other managers in recent years, including Vanguard, have narrowed iShare’s first-mover advantage.

International Equities recorded the largest broad group categories inflows for the year to 31 March 2018, followed by Australian Equities and Fixed Interest (Other).

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Source: Morningstar Direct

The Australian ETF market continues to be dominated by four major players — iShares (29.38%), Vanguard Investment Australia (28.26%), State Street Global Advisors (15.13%) and BetaShares Capital (12.67%).

Further down the rankings, VanEck Investments Limited overtook Magellan Asset Management for the fifth spot after seeing yearly inflows of $837 million to Magellan’s $242 million.

Drilling down into individual funds, Vanguard Australian Shares ETF drew the highest estimated net flows for the year to 31 March 2018 at $673 million, according to Morningstar's estimated net flow, followed by iShares Core S&P/ASX 200 ETF ($656 million), and Vanguard MSCI Index Intl ETF ($464 million).

The Australian exchange-traded product market continued to innovate, and now counts 176 exchange-traded products. Prineas says the ETF market is broadening as active ETPs, strategic beta and other approaches gain investor attention, alongside traditional passive ETFs. Sustainability focused products have contributed to this trend, increasing in number and variety over the past five years as they capture investor attention.

Australian retail investors now have access to 10 ESG-focused (environmental, social and governance) ETPs from four providers: BetaShares, Russell Investments, UBS, and VanEck Vectors. All are equity products with exposure in Australia and offshore.

Across the sector, the Australian ETF market grew substantially over the year, up from $27.1 billion in March 2017 to $36.3 billion.

*All data is sourced from Morningstar Direct unless otherwise stated.

 

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Emma Rapaport is a reporter for Morningstar Australia.

© 2018 Morningstar, Inc. All rights reserved. Neither Morningstar, its affiliates, nor the content providers guarantee the data or content contained herein to be accurate, complete or timely nor will they have any liability for its use or distribution. This information is to be used for personal, non-commercial purposes only. No reproduction is permitted without the prior written consent of Morningstar. Any general advice or 'class service' have been prepared by Morningstar Australasia Pty Ltd (ABN: 95 090 665 544, AFSL: 240892), or its Authorised Representatives, and/or Morningstar Research Ltd, subsidiaries of Morningstar, Inc, without reference to your objectives, financial situation or needs. Please refer to our Financial Services Guide (FSG) for more information at www.morningstar.com.au/s/fsg.pdf. Our publications, ratings and products should be viewed as an additional investment resource, not as your sole source of information. Past performance does not necessarily indicate a financial product's future performance. To obtain advice tailored to your situation, contact a licensed financial adviser. Some material is copyright and published under licence from ASX Operations Pty Ltd ACN 004 523 782 ("ASXO"). The article is current as at date of publication.

is the editorial manager for Morningstar Australia. Connect with Emma on Twitter @rap_reports. You can email Morningstar's editorial team editorialAU[at]morningstar[dot]com

© 2021 Morningstar, Inc. All rights reserved. Neither Morningstar, its affiliates, nor the content providers guarantee the data or content contained herein to be accurate, complete or timely nor will they have any liability for its use or distribution. This information is to be used for personal, non-commercial purposes only. No reproduction is permitted without the prior written consent of Morningstar. Any general advice or 'regulated financial advice' under New Zealand law has been prepared by Morningstar Australasia Pty Ltd (ABN: 95 090 665 544, AFSL: 240892), or its Authorised Representatives, and/or Morningstar Research Ltd, subsidiaries of Morningstar, Inc, without reference to your objectives, financial situation or needs. For more information, refer to our Financial Services Guide (AU) and Financial Advice Provider Disclosure Statement (NZ). Our publications, ratings and products should be viewed as an additional investment resource, not as your sole source of information. Morningstar’s full research reports are the source of any Morningstar Ratings and are available from Morningstar or your adviser. Past performance does not necessarily indicate a financial product's future performance. To obtain advice tailored to your situation, contact a licensed financial adviser. Some material is copyright and published under licence from ASX Operations Pty Ltd ACN 004 523 782. The article is current as at date of publication.

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