Summary:
The inclusion of global ETFs, specifically the US and Europe, is intended to provide two types of investor insights and that are ultimately pertinent to the Australian ETF market.Firstly, inflows / outflows data and which clearly provides a strong signal regarding investor sentiment regarding asset classes, geographic preferences or otherwise, thematic / sector preferences, and finally fear and greed levels.
Secondly, new issue ETFs reflect ‘real-time’ investment theme investor sentiment. i.e, what’s ‘hot’. Additionally, the largest Australian ETF issues are all part of large international entities. And often what ETF is issued in their home markets and, to some degree, subsequently issued in Australia.
US ETF Flows by Asset Class
The value of ETF flows data is relatively obvious – it highlights asset class inflows and outflows.As such, it illustrates investor asset class preferences at any given time.Relative to the ASX data, which is monthly, US data is available on both a more frequent and timely basis. The data below is as at 30 May 2025.
Figure 1: One Week US ETF Flows (as at 30 May)
Figure 2: US ETF Flows by Asset Class (as at 30 May)
US ETF Flows by Asset Class (as at 22 May)
| Asset Class | 1-week | 1-month | 3-month | YTD | 1-year |
|---|---|---|---|---|---|
| Non-Traditional | $624M | $4,577M | $37,857M | $51,805M | $1,03,931M |
| Multi-Asset | $109M | $262M | $1,238M | $1,238M | $3,468M |
| Fixed Income | $8,261M | $30,287M | $77,004M | $1,41,592M | $3,54,390M |
| Equity | $11,920M | $31,425M | $1,34,346M | $2,13,889M | $7,39,687M |
| Currency | -$52M | $17M | $968M | $1,042M | $950M |
| Cryptocurrency | $1,801M | $7,701M | $2,673M | $7,745M | $35,422M |
| Commodity | -$1,885M | -$4,178M | $8,950M | $13,300M | $18,093M |
| Alternative | $26M | $241M | -$79M | $654M | $1,731M |
Global Select ETF News
Wall Street’s Rush to Launch Vanguard-Style Dual Listed Funds Draws Warnings
The US Securities and Exchange Commission is expected to approve applications for dual-share-class structures, allowing managers to add an ETF sleeve to an existing mutual fund, which could bring the two vehicles closer together. More than 50 firms, including BlackRock Inc. and State Street Corp., are waiting for the regulator’s greenlight to deploy the hybrid structure — made possible after Vanguard Group Inc.’s exclusive patent expired two years ago.
The two-in-one blueprint is a tantalizing prospect for asset managers looking to break into the ETF market at scale, without having to launch a new strategy from scratch. It also offers a lifeline to firms battered by years of mutual-fund outflows, as investors fled for more tax-efficient alternatives and the convenience of daily liquidity. The hybrid structure famously helped Vanguard save its clients billions in taxes over two decades.
But there are two key concerns. First, some Wall Street experts caution the shake-up could erode key benefits of the wrapper, especially if hybrid funds face significant withdrawals during market stress. Second, At the heart of the concern is a tax dynamic that ETFs were built to avoid. These funds rarely pay capital-gains tax distributions, thanks to their in-kind redemption process, which allows the issuer to swap securities with authorized participants rather than sell them outright. By contrast, mutual funds redeem in cash, meaning managers may need to sell securities to meet outflows. If those sales generate capital gains, they may distribute them to investors. In a hybrid vehicle, those taxable gains risk getting passed onto ETF shareholders too.
Newly Minted ETFs Buck Vanguard Effect as Fees Hit Record High
The average fee of an exchange-traded fund launched this year has surged to a record 65 bps, with leveraged trades, cryptocurrency, and active management among the slew of nearly 350 new offerings. That said, despite the high fees of new ETFs, the average asset-weighted expense ratio across all funds is falling and hovering around its lowest level on record, at 17.5 bps.
Paradoxically, the all-time high costs can be linked back to the race toward lower fees among the highest ranks of the ETF league tables. Fund giants like the Vanguard Group, BlackRock Inc. and State Street Corp. have spent years slashing fees, or expense ratios, on their index-tracking, core portfolio funds to near zero, in an effort to attract new investors. But as the so-called Vanguard Effect has lowered fees for investors, it in turn has given them the resources to allocate a slice of their portfolios to more expensive, niche funds. The scale and efficiency of ultra-low-cost products have helped subsidize the expansion of higher-fee offerings elsewhere, supporting broader innovation and diversification across the ETF landscape.
Global Select ETF Launches
New issue ETFs reflect ‘real-time’ investment theme investor sentiment. i.e, what’s ‘hot’. Additionally, the largest Australian ETF issues are all part of large international entities. And often what ETF is issued in their home markets and, to some degree, subsequently issued in Australia.
Regarding the table below, there are several distinct themes reflecting investor preferences currently:
- German equities ETFs – Germany has been running hot all of 2025. Initially it was a relative value play vs the US. Then it became a defense sector play as well as the major theme of a diversification away from the US.
- Income related ETFs – defensive, fixed income products, partly reflecting the more defensive or at least diversification of portfolios given a range of uncertainties, particularly in the US and in US equities.
- The Innovator Capital Management launched the Innovator Equity Managed 100 Buffer ETF is an interesting product. It is an actively managed solution that seeks to provide 100% downside protection through a one-year laddered options portfolio. It is reflective of many ETFs that have been issued over the circa last 4-6 weeks particularly in the US – equities exposure but with either downside preservation or downside protection.
- Global / international equities ETFs. Same theme – diversification away from the US.
- Franklin Templeton to convert 10 Putnam Municipal Bond mutual funds to ETFs. I wonder why. These is a very common dynamic these days.
Select ETF Launches, for May 8th to 22nd 2025
| Select European ETF Launches |
|---|
| STOXX launches DAX Composite Indices |
| First Trust launches three ETFs on Deutsche Börse |
| Crédit Agricole and Solactive launch Solactive Constant Maturity Government Bond Index Family |
| Janus Henderson launches UCITS mortgage-backed securities ETF |
| Franklin Templeton to convert 10 Putnam Municipal Bond mutual funds to ETFs |
| Select US ETF Launches |
| Vontobel Asset Management, Inc. launched the Vontobel International Equity Active ETF |
| Lazard Asset Management converted the Lazard International Equity Advantage mutual fund into an ETF |
| Innovator Capital Management launched the Innovator Equity Managed 100 Buffer ETF |
| Russell Global Infrastructure Active ETF |
*Closing price as at end of week. Returns in AUD before fees