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.
ETF News – When Private Markets go Public (apply the correct RGB)
Deloitte predicts Private capital ETFs are set to take the financial services sector by storm over the next three to five years. According to the Deloitte’s 2025 Financial Services Industry Predictions report, US and European retail investors are expected to pour money into private capital, reaching as much as US$2.4 trillion in 2030 from the current US$80 billion.
This growth is set to be driven by expanding product offerings and regulatory changes that make private capital more accessible to retail investors. This includes both mutual funds and ETFs. For example, investment managers BondBloxx Investment Management and Virtus Investment Partners each launched actively managed ETFs with private credit exposure last December. State Street Global Advisors (SSGA) launched an actively managed private credit ETF in February with the aim to provide all investors with access to private markets by investing in both public and private credit such as asset-based finance and corporate lending.
Deloitte predicts that private capital within mutual funds and ETFs will be up to 15% of illiquid investment allotment and will likely be a driving factor for US retail investors’ increased allocation to private assets over the next five years.
Vanguard joins rush into private markets alongside BlackRock and State Street. You read right – Vanguard and private markets. And collectively, the world’s three largest asset managers all aiming to democratise illiquid private assets for retail investors. Vanguard’s decision to create hybrid funds of public and private assets in a new strategic alliance with Blackstone and Wellington. No meaningful details, such as fees, for the new products have been announced but Vanguard will now be competing in the race with its biggest rivals including BlackRock and State Street Global Advisors to bring more illiquid private assets into the portfolios of everyday investors. BlackRock’s aim, as explained in Larry Fink’s latest investor letter, is to wrap infrastructure and private credit into ETFs. ETFs that invest in collateralised loan obligations (CLO’s) – securitised bundles of debt that widely hold loans to private equity companies – are proliferating on both sides of the Atlantic.
So the trend for including more complex, illiquid, less transparent assets into ETFs that carry higher fees is clearly gathering momentum. Index providers are also working hard to create new private asset benchmarks that will appeal to ETF managers. MSCI this week launched two MSCI All Country Venture-Backed Private Company indexes, the first MSCI benchmarks that can measure the performance of private markets at the company level. MSCI last year also created a series of private capital indices that track the performance of closed-end funds that hold around $11trn in assets.
Private credit ETF achievable for DWS but CEO Hoops ‘sceptical’. Private market exposure could increase sharply in a ‘negative sentiment environment’. While delivering private credit is ‘conceptually’ achievable for DWS, its CEO, Stefan Hoops, said he remains ‘sceptical’ about wrapping private assets in an ETF promising daily liquidity. To make the structure work, Hoops noted that the private securities would probably have to be blended with liquid holdings so that the issuer knew what they needed to sell in the event of outflows.
The comments were made in response to the groundbreaking private credit ETF launched recently in the US by State Street Global Advisors (SSGA) and Apollo Global Management. The SPDR SSGA Apollo IG Public & Private Credit ETF’s (PRIV) private credit allocation will “generally range” between 10-35% of net assets with the weighting at the sole discretion of the portfolio managers. Apollo has a unique role as liquidity provider on the ETF – committing to provide ‘executable quotations’ on all private credit instruments and purchase them from the fund, up to an undefined ‘daily limit’, at or above the quoted price.
Despite attracting lots of attention from the industry, PRIV has fail to command significant inflows to-date. The ETF currently houses just $55m in assets under management (AUM) and no new shares have been created since 4 March.
In Australia, Global X is preparing to launch a China technology ETF, citing the country’s shift from policy planning to delivery, stabilising fundamentals and depressed valuations, while also emphasising the critical nature of selective exposure. Ahead of the launch of the Global X China Tech ETF (ASX: DRGN), the firm said the country’s years of strategic investment in manufacturing capacity, digital infrastructure and research capabilities are now translating into “operational scale” across multiple sectors. Global X emphasised the semiconductors, EV, and industrial automation in China as being particularly prospective.
HSBC Asset Management is poised to become the latest issuer to enter the most crowded segment of Europe’s active ETF market – Systematic Active ETFs (what this author refers to as scientific investment strategies based on circa 50-100 signals empirically proven and statistically significant signals). The race to enter this popular segment of the active ETF market is intensifying, with Goldman Sachs Asset Management unveiling a five strong range of systematic active equity ETFs and BNP Paribas Asset Management nearing the debut its first alpha-seeking active ETFs last month. Other fund promoters are also entering the systematic active space, with DWS noting in its Q1 earnings it has three systematic active ETFs in its pipeline. In Australia, Macquarie offer a number of ETFs based on systematic active investment strategies.
The European ETF market had its best quarter in terms of flows, with USD93 billion of AUM in Q1 eclipsing the previous record of USD91 billion set in Q4 2024, according to Invesco’s latest European ETF Snapshot. The firm writes that despite broadly flat equity returns, strong performance for commodities, particularly gold, and solid gains in fixed income markets helped push total European ETF AUM to USD2.38 trillion as at the end of the quarter.
Equity flows in European ETFs remain resilient as investors pivot to Europe. Despite market uncertainty towards the end of the quarter, the proportion of total ETF flows into equities in (80 per cent) remained in line with the 2024 average. However, the data revealed a pivot away the US towards Europe. Concurrently, appetite for US equities fell, with USUSD2.2 billion of outflows in March taking the total for the quarter to USUSD4.5 billion, less than 10 per cent of the record level seen in Q4 of last year.
Demand for gold ETFs in Europe rises amidst price rally. Gold was the big winner in the commodity asset class. Flows into gold ETPs have been positive for the past four months after being largely absent for most of the gold price rally before then. Gold was the best-performing asset in Q1 with a 19 per cent return, driven by the allure of its perceived “safe haven” characteristics as equity markets fell and the economic outlook became increasingly uncertain.
New ETF Issuance
If you examine the table below there are several distinctive trends and its not difficult to understand why they are being issued:
- In Europe, pure long equities exposures are connected to European Defence and Emerging Markets.
- In relation to US equities exposure, including those issued in Europe, there is a distinct trend to downside exposure preservation. There are several Buy-write strategies and several Collar strategies. Under the former, a call option is sold over a long exposure, which caps capital gains at a certain level but buffers capital downside based on the option premium received by selling the call. Under the latter, the strategy involves selling a call and buying a put. Less total option premium than a buy-write (as the strategy has to fund the put) but unlike a buy-write there is a limited defined and capped downside risk (and limited capped upside). Derivate overlay ETFs providing downside preservation have been one of the more successful ETF strategies this year in the US.
- AAA CLO ETFs (actively managed) are hot at the moment both in Europe and the US and there is good reason they are. The critical factor here is that they are AAA – the highest rank in what are multi tranched securitised structures. The drawdown profile of AAA is almost negligible and very different to, say, the BB tranche. These are steady, consistent income, sleep at night products. We would like to see such products introduced into Australia but we acknowledge investor knowledge of the structure is very limited.
New ETF Launches- Week of 24 April – 1 May
Australia
Global X is launching the Artificial Intelligence Infrastructure ETF
Europe
WisdomTree Enhanced Commodity Carry ETC (CRRY)
Janus Henderson Tabula EUR AAA CLO UCITS ETF (EUR)
Goldman Sachs Alpha Enhanced US Equity Active UCITS ETF
USA
Grayscale Bitcoin Adopters ETF (Ticker: BCOR)
Simplify Piper Sandler US Small-Cap PLUS Income ETF (Ticker: LITL)
ETFs Weekly Summary
| Name | CODE | Closing Price | Æ Week Price ($) | 1 Mth Return (%) | 1 Yr Return (%) | Running Yield(%) | Market Cap (in Mill.) |
|---|---|---|---|---|---|---|---|
| BetaShares Australian High Interest Cash ETF | AAA.AXW | 50.11 | -0.13 | 0.34 | 4.53 | 4.40 | 4362.07 |
| BetaShares Australian Government Bond ETF | AGVT.AXW | 42.33 | 0.03 | 1.96 | 7.72 | 3.51 | 913.39 |
| BetaShares Australian Major Bank Hybrids Index ETF | BHYB.AXW | 9.84 | -0.04 | -0.20 | 3.66 | 6.61 | 572.02 |
| iShares Core Cash ETF | BILL.AXW | 100.77 | 0.08 | 0.33 | 4.56 | 4.37 | 762.24 |
| SPDRÊS&P/ASX Australian Bond Fund ETF | BOND.AXW | 25.74 | 0.04 | 1.42 | 6.89 | 1.53 | 42.75 |
| BetaShares Legg Mason Australian Bond Fund | BNDS.AXW | 23.85 | -0.02 | 1.35 | 7.14 | 3.91 | 828.24 |
| BetaShares Australian Investment Grade Corporate Bond ETF | CRED.AXW | 23.3 | 0.06 | 1.09 | 9.56 | 4.78 | 1113.96 |
| Daintree Hybrid Opportunities ETF | DHOF.AXW | 9.48 | 0.07 | -0.42 | 3.25 | 5.82 | 52.51 |
| Elstree Hybrid Fund ETF | EHF1.CXA | 5.16 | -0.04 | 5.73 | 41.06 | ||
| Daintree Core Income FundÊETF | DCOR.AXW | 51 | 0.02 | -0.54 | 1.00 | 42.22 | |
| VanEck Vectors Australian Floating Rate ETF | FLOT.AXW | 24.86 | -0.03 | 0.16 | 5.01 | 5.03 | 761.54 |
| BetaShares Sustainability Leaders Diversified Bond Hedged ETF | GBND.AXW | 20.81 | 0.14 | 1.71 | 5.48 | 2.93 | 240.38 |
| BetaShares Global Government Bond 20+ Year ETF Ð Currency Hedged | GGOV.AXW | 13.31 | 0.19 | -2.35 | 2.33 | 2.92 | 208.03 |
| Janus Henderson Sustainable Credit Active ETF | GOOD.AXW | 51.22 | 0 | 1.07 | 3.79 | 4.97 | 1.54 |
| SPDRÊS&P/ASX Australian Government Bond Fund ETF | GOVT.AXW | 24.66 | 0.02 | 1.52 | 6.90 | 2.32 | 58.35 |
| BetaShares Active Australian Hybrids Fund ETF | HBRD.AXW | 10.06 | -0.02 | -0.14 | 5.13 | 6.42 | 2359.33 |
| BetaShares Interest Rate Hedged Australian Investment Grade Corporate Bond ETF | HCRD.AXW | 24.94 | -0.02 | -0.76 | 6.79 | 4.82 | 42.52 |
| iShares Core Composite Bond ETF | IAF.AXW | 103.22 | 0.29 | 1.54 | 6.73 | 2.83 | 3003.42 |
| iShares Treasury ETF | IGB.AXW | 99.72 | 0.23 | 1.77 | 6.29 | 2.44 | 426.76 |
| iShares Global High Yield Bond ETF | IHHY.AXW | 92.31 | 0.54 | 0.57 | 7.42 | 6.30 | 214.47 |
| iShares Core Global Corporate Bond ETF | IHCB.AXW | 91.01 | 0.43 | -0.07 | 5.50 | 4.04 | 259.82 |
| iShares J.P. Morgan USD Emerging Markets Bond ETF | IHEB.AXW | 73.73 | 0.65 | -0.12 | 6.76 | 5.08 | 54.09 |
| iShares Government Inflation ETF | ILB.AXW | 124.29 | 0.05 | 0.62 | 1.90 | 1.67 | 915.12 |
| iShares Enhanced Cash ETF | ISEC.AXW | 100.88 | 0.09 | 0.34 | 4.67 | 4.47 | 289.85 |
| Betashares Australian Composite Bond ETF | OZBD.AXW | 45.03 | 0.07 | 1.61 | 7.84 | 3.82 | 553.80 |
| VanEck Vectors Australian Corporate Bond Plus ETF | PLUS.AXW | 17.09 | 0 | 1.00 | 8.47 | 3.89 | 369.53 |
| BetaShares Australian Bank Senior Floating Rate Bond ETF | QPON.AXW | 25.91 | -0.05 | 0.25 | 5.03 | 5.36 | 1603.28 |
| Russell Australian Select Corporate Bond ETF | RCB.AXW | 20.37 | 0.05 | 0.94 | 7.15 | 3.87 | 291.39 |
| Russell Australian Government Bond ETF | RGB.AXW | 19.39 | 0.01 | 1.52 | 6.57 | 1.89 | 244.07 |
| Russell Australian Semi-Government Bond ETF | RSM.AXW | 20.95 | 0.09 | 1.45 | 7.49 | 0.00 | 57.76 |
| VanEck Vectors Australian Subordinated Debt ETF | SUBD.AXW | 24.94 | -0.02 | -0.08 | 5.71 | 5.97 | 2382.61 |
| VanEck 1-3 Month US Treasury Bond ETF | TBIL.AXW | 51.75 | -1.02 | -2.28 | 6.57 | 4.50 | 146.09 |
| US Treasury Bond 7-10 Year Currency Hedged ETF | US10.AXW | 51.07 | 0.45 | 0.24 | 6.08 | 3.21 | 27.61 |
| Betashares Inflation Protected US Treasury Bond (Hedged) ETF | UTIP.AXW | 25.92 | 0.17 | -0.38 | 5.79 | 1.88 | 188.71 |
| Vanguard Australian Corporate Fixed Interest ETF | VACF.AXW | 51.77 | 0.15 | 0.92 | 7.38 | 3.39 | 679.50 |
| Vanguard Australian Fixed Interest Index ETF | VAF.AXW | 46.44 | 0.09 | 1.35 | 6.84 | 2.70 | 2588.98 |
| Vanguard Global Aggregate Fixed Interest Index Hedged ETF | VBND.AXW | 42.16 | 0.21 | 0.50 | 5.65 | 2.25 | 2592.20 |
| Vanguard International Credit Securities Index ETF | VCF.AXW | 38.67 | 0.23 | 0.08 | 5.72 | 2.75 | 173.77 |
| Vanguard Ethically Conscious Global Aggregate Bond Index Hedged ETF | VEFI.AXW | 42.89 | 0.19 | 0.75 | 5.43 | 2.26 | 75.38 |
| Vanguard Australian Government Bond Index ETF | VGB.AXW | 47.19 | 0.05 | 1.59 | 6.67 | 2.64 | 1091.79 |
| Vanguard International Fixed Interest Index ETF | VIF.AXW | 39.01 | 0.16 | 0.88 | 4.61 | 1.79 | 871.93 |
| ActiveX Ardea Real Outcome Bond Fund ETF | XARO.AXW | 24.01 | 0.06 | -0.21 | 2.15 | 1.49 | 216.88 |
*Closing price as at end of week. Returns in AUD before fees