Australian ETFs surpass annual inflow record

Australia's exchange traded fund (ETF) industry has surpassed its previous full-year inflow record, with investor demand pushing assets under management (AUM) to a new high of $389.5 billion in October.

According to Betashares' Australian ETF Review, the industry attracted $5.1 billion in net inflows during the month, lifting year-to-date flows to $55.6 billion. This is exceeded the $52.9 billion recorded across the whole of 2025, with two months remaining in the calendar year.

While October's inflows moderated from the nearly $7 billion monthly totals recorded over the preceding three months, assets continued to expand even as market conditions weakened.

International equities remained the largest recipient of investor capital, attracting $2.3 billion, while Australian equities drew $1.3 billion and fixed income ETFs received $1.1 billion

Smart beta ETFs also reached a milestone, with funds under management climbing to $50.8 billion at the end of October. Net inflows totalled $8.77 billion across the first 10 months of 2026, already exceeding the category's previous annual record of $8.24 billion for all of 2025.

Betashares investment strategist Tom Wickenden said the growth reflected increasing interest in rules-based investment strategies.

"Smart beta ETFs have passed $50 billion, a milestone that shows how far rules-based investing has come in Australian portfolios," Wickenden said.

He said financial advisers were increasingly using the strategies as alternatives to higher cost active management.

"Investors are using smart beta ETFs to be more deliberate about what they own," he said, citing exposures including quality, value, momentum and rules-based bond and income strategies.

Betashares received $4.61 billion, or 53% of smart beta ETF inflows, through October.

Wickenden said greater investor education around index-based strategies was helping sustain demand, as investors sought transparent and lower-cost ways to achieve targeted portfolio exposures.

Arian Neiron, chief executive and managing director Asia Pacific at VanEck, confirmed Australia's ETF industry has already surpassed last year's full-year inflow record, attracting $55.7 billion year to date compared with $53.6 billion in all of 2025, according to their own research.

Despite softer market conditions in October, smart beta ETFs continued to gain traction, drawing $926 million and accounting for 17.6% of monthly inflows, while the overall Australian ETF market grew to $389.9 billion in assets under management and is on track to exceed $400 billion by year-end.

Alternatively, recent analysis by InvestSMART chief executive Ron Hodge, inflows into ASX listed ETFs fell 25% to $5.07 billion in October from $6.74 billion in September. Fixed-income ETFs attracting almost $1.1 billion and increasing their share of total inflows to nearly 22%.

Equities remained the largest destination for investor money, bond funds proved more resilient amid higher interest rates, helping lift the overall ASX ETF market to $377.9 billion, up 21% over the past year.