Australian ETF market surges to record $346bn

Australia's exchange traded fund industry has climbed to a record $346 billion in assets under management after posting one of its strongest monthly gains on record in April.

New data from Betashares showed the local ETF market grew by $16.6 billion during the month, marking the third largest monthly dollar increase in industry history. The sector expanded 5.05% over the month and is now up 33.6% year on year.

Strong investor inflows combined with a rebound in global equity markets drove the result, with total net flow reaching $5.4 billion for April.

International equities dominated investor demand, attracting $2.6 billion, almost half of all industry inflows. Investors positioned for continued momentum across offshore markets, particularly in US technology and artificial intelligence (AI) linked sectors.

Australian equity followed with $1.5 billion in inflows, while fixed income strategies drew just over $1 billion as investors continued seeking diversification amid interest rate uncertainty.

Passive investment strategies continued to dominate the market, accounting for more than $5 billion of April inflows, compared to $336 million directed into active ETFs.

The industry's largest issuers remained Vanguard, Betashares and iShares, which together captured more than three quarters of all industry inflows during the month.

The largest ETFs by market capitalisation continues to be broad-based equity exposures, including Vanguard Australian Shares ETF (VAS), Vanguard MSCI index international Shares ETF (VAS), Vanguard MSCI Index International Shares ETF (VGS) and iShares S&P 500 ETF (IVV).

The report noted investor appetite for technology linked exposures remained strong amid continued optimism around artificial intelligence infrastructure spending and semiconductor demand.

At the same time, flows into fixed income and cash strategies increased as the Reserve Bank of Australia delivered its third-interest rate rise of the year in early May, reinforcing expectations that investors are balancing growth opportunities with more defensive positioning.