Index investment soars: Research

New research from Rainmaker Information has revealed indexed investments in the Australian market grew by 22% in the year to September 2019, surging to more than $500 billion.

Indexed investments grew by 22% over the period, twice as fast as active investments.

"The growth in indexed management is not surprising given the difficulty so many active managers have had in beating their investment benchmarks," Rainmaker head of research John Dyall said.

"Part of the problem, I believe, is an inability on the part of active managers to create a coherent narrative around active investing that goes beyond pure headline performance. There's more to active investing than outperformance."

Over the 12 months to the end of September 2019, Australia's investment management market grew by 9% to $2.7 trillion.

Superannuation assets grew by 7.1% over the same period to account for $2.9 trillion in total funds under management.

MySuper assets grew by 12.2%, significantly faster than the overall super market.

Lifecycle MySuper assets grew 15% while single strategy MySuper assets grew 10%.

But the big winner when it comes to super FUM was not for profit super funds which now claim more than 50% of total super assets.

Not for profit super was the fastest growing segment of the super market with approximately $1.4 trillion in FUM, compared to retail super's $694 billion.

An overwhelming 72% of all super contributions went into not for profit funds. Retail funds only attracted 28%.

Industry funds accounted for 55% of the not for profit share when it came to net flows.

By FUM, the largest investment manager in Australia at the end of September last year was State Street Global Advisers with approximately $174 billion, followed by Vanguard with $161 billion.

IFM, for obvious reasons, experienced strong FUM growth over the period - 33.2% taking its FUM to over $110 billion.

The ETF market grew 34% to reach $56 billion, meaning it now exceeds the $47 billion LIC market and is growing twice as fast.

ESG products and mandates were up 46% in the period too, partly due to more managers reporting their ESG credentials. REITs were up 27.4% and private equity up 24%.

Read more: FUMRainmaker InformationESGLifecycle MySuperIFMJohn DyallLICState Street Global AdvisersVanguard
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