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Exchange Traded Products are winning the distribution war

Rainmaker Information 3 mins read

Analysis of net funds flow in the Australian investment products market shows that Exchange Traded Products (ETPs) are stomping the historical world of unlisted unit trusts.

In the 12 months to March 2024, total net flows for ETPs and unit trusts combined was estimated at negative $9.2 billion on total assets of $720 billion as at 31 March 2024, according to Rainmaker Information’s Wholesale Managed Funds Net Flows Report.

“Strong market returns have hidden a lot of the damage done to the market,” according to John Dyall, head of investment research at Rainmaker Information.

“If you look at revenues, there’s no crisis.”

“Market returns contributed 9% to the growth of total assets, while net flows lost 1% based on the assets under management as at March 2024.”

“The real issue is that investors are preferring the distribution channel of ETPs over the traditional unit trust structure.”

“The other issue is whether the mix of options available in unit trusts is meeting the needs of today’s investors in the same way that ETPs are.”

“There are more assets in unit trusts by a long way, and those assets increased by $42 billion in the past year, but without the market gains they would have lost 4% or $23 billion in the past year from net flows alone,” Dyall said.

ETPs, on the other hand, increased their assets under management by around 30% or $37.5 billion through a combination of market returns and positive net flows of $15 billion.

The ETPs with the highest net flows over the year to 31 March 2024 were iShares Global Bond Index Fund ($1.575 billion), Betashares Australia 200 ETF ($1.281 billion) and Vanguard Australia Shares Index ETF ($1.279 billion).

In terms of net flows for individual products, ETPs had 150 products with 12-month positive net flows versus 91 with negative net flows.

This contrasts with unit trusts which had a positive to negative flow ratio of 307 to 561 respectively.


About us:

About Rainmaker Information

Rainmaker Information, founded in 1992, is a leading Australian-based financial services information publishing house providing marketing intelligence, research, and consulting services on the wealth management industry. 

 

Rainmaker gathers and generates in-depth marketing intelligence with industry research, data, professional development and media capabilities. These resources can be accessed with a subscription to the RainmakerLive terminal. 

 

Rainmaker Information is owned by Institutional Shareholder Services (ISS) and is part of its ISS Market Intelligence business. 

 

  

About ISS Market Intelligence  
ISS Market Intelligence (MI) is a leading global provider of data, analytics, insights, media, and events solutions to the global financial services industry. 

 

ISS MI empowers global asset and wealth management firms, insurance companies, distributors, service providers, and technology firms by providing cutting-edge market-engagement platforms and the actionable intelligence necessary to fully assess their target markets, identify and analyze the best opportunities within those markets, and execute on comprehensive go-to-market initiatives to grow their business.  

 

ISS MI clients benefit from our increasingly connected global ecosystem that leverages a combination of proprietary data, powerful software and analytics, timely and relevant insights, in-depth research, as well as an extensive suite of industry leading media brands that deliver unmatched market connectivity through news and editorial content, events, training, ratings, and awards.  


Contact details:

Julian Clarkstone 
P. 02 8234 7514 
E. julian.clarkstone@rainmaker.com.au

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