En garde: New fund eyes Vanguard, Betashares' turf

Vanguard, Betashares, and BlackRock have an iron grip over the ETF industry, commanding the lion's share of funds under management (FUM) - thanks largely to their flagship core, low-cost equity exposures. However, Financial Standard understands that Global X may plan to challenge the incumbents where they're arguably strongest.

Clues to Global X's intentions lie in an Australian Business Number (ABN) registration titled 'The Trustee for Global X 300 ETF.'

A few weeks earlier, a separate entry appeared on ASIC's company registry under the name 'Global X Australia 300 ETF.'

While no product has launched, the filings suggest that Global X is prepping its first shot at a broad-based Australian equity ETF.

Global X senior product and investment strategist Marc Jocum confirmed its ambition to "do more in the core space," but noted that the finer details are still being worked through.

Jocum also couldn't confirm the specific product Global X is thinking of launching.

He did, however, note that broad-based Australian equity ETFs continue to lead flows, drawing $3.6 billion year-to-date and more than $7 billion over the past year.

Next were global core equity ETFs, with $2.8 billion in flows year-to-date and $6.3 billion over the past year.

"Global X wants to be a player that can fit all the different buckets in a client's portfolio," Jocum said.

It wants to be "relevant to more clients," rather than being seen purely as a thematic and commodities-focused shop.

This idea to diversify its business has been informed by the fact that at least two-thirds of ETF flows are driven by financial advisers. Through conversations with them, Jocum said Global X understands most adopt a core satellite approach for their clients.

"We've heavily been satellite focused historically," he said.

A core product, which is under strategic consideration, could also support its drive to capture a larger share of the total ETF marketplace.

Currently, it ranks as the sixth-largest ETF issuer in Australia, holding a 3.9% market share.

Notably, the recent registrations could either reflect final product names or serve as placeholders. The firm has previously registered funds under working titles, only to later change or abandon them entirely.

The development comes as Vanguard celebrates a major milestone for its Australian Shares Index ETF (ASX: VAS). The largest ETF in Australia, the fund surpassed $20 billion in funds under management at May end; in January 2020 it had just $4.9 billion.