Strong Growth Forecast for Australia’s ETF Market
June 6th 2012 at 3:12pm by Tom Lydon
The exchange traded fund industry in Australia could grow 10 times larger than what it is today. Currently, the business has $5 billion in assets under management, with indications of strong growth to come.
“If you go back to 2003, the Canadian ETF industry had $5.5bn invested, which is roughly the same amount invested in Australia’s ETF industry today,” he said. “My point is that if you adjust for the timeline you end up with about the same assets. There is a huge growth profile ahead for this industry in this country,” Howard Atkinson, President of Horizon ETF Management said. [BlackRock CEO Says ETFs Proliferating on Global Scale]
The parallel made between Canada and Australia was due to the similarities in both economies. However, while there is $5 billion in domestic Australian assets, there are $50 billion in AUM in the Canadian ETF industry. [Currency ETFs: Why it Pays to Watch the Aussie Dollar]
The first ETF was launched by State Street in 1993 in the United States. It wasn’t until 2001 that State Street launched the first ETF in Australia, and tracked the ASX 200. This delay of nearly a decade is a factor that has held up growth in the Aussie ETF industry, according to Atkinson, reports James Frost for The Australian.
According to Atkinson, growth will improve with the advent of the actively managed ETF, and along with the offering of commission-free trades. The commission-free trade will also boost the retirement industry, a boon for investors that make regular contributions to their retirement plans. [ETF Spotlight: Australia]
The commission-free ETF trade is a reality in the U.S., with many providers offering free trades for in-house brokerage accounts. Furthermore, lower fees for ETFs across the board should also catch on in Australia.
There are currently 69 ETFs trading in Australia, with ETF Securities planning to launch 10 new funds this week.
Tisha Guerrero contributed to this article.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.