Industry Updates

VAS becomes Australia’s biggest ETF, as STW bleeds $170 million

David Tuckwell


Aussie investors are sending a strong message about fees.

State Street’s STW – the legendary first ETF in Australia – has lost its crown as Australia’s largest ETF after bleeding $170 million in assets in July, new ASX data reveals.

TickerFund NameJuly Inflows/outflows ($M)AUMFeeA200Betashares Australia 200 ETF157.59        684.020.07%IOZiShares Core S&P/ASX 200 ETF41.66     1,352.590.09%STWSPDR S&P/ASX 200-170.56     3,856.840.19%VASVanguard Australian Shares Index ETF96.92     4,058.790.10%

That STW bled $170 million in such a short period of time suggests a big buyer – likely an institution – has cashed out.

The outflows to STW come as its three top competitors – Vanguard’s VAS, BlackRock’s IOZ and BetaShares A200 – all saw large inflows. They come at a time that State Street has been criticised for failing to pass on STW's franking credits to unit holders, and come as State Street's main competitors are issuing generous fee cuts on their core Aussie products.

STW listed in 2001 and introduced ETFs to Australia. It ruled the roost for 17 years as the country’s largest ETF and has done more than any other product to make Australians comfortable with ETFs.

Thanks to its first mover advantage, superior liquidity and 10-year exclusivity deal with the ASX/S&P 200 Index, STW was able to charge a premium price - often double - over its competitors.

Opinion: State Street is right to keep STW's fees high

However, as in all things, first mover advantages only lasts so long. After 10 years of underpricing from VAS and IOZ - together with a more educated Aussie ETF market, more able to compare products - the fund has been put in second place. It's also lost its crown as the country's most liquid ETF, ASX data also suggests, overtaken again by VAS.

Contacted for comment by ETF Stream, Evan Reedman, Vanguard Australia's ETF boss, said:

"We look at these as assets entrusted to us by investors. It's a responsibility we take seriously knowing that these assets are someone's retirement or educations savings or house deposit. We're proud and humbled."

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