The Australian Securities Exchange yesterday released it figures for Q1 trading and saw nearly AU$1.9bn worth of cash flows in the ETF market, up from $1.5bn in Q1 2018. While equity ETFs remain the most popular asset class accounting for 37.4% of total cash flows, fixed income ETFs jumped from 16% of cash flows in Q1 2018 to 27.5% in Q1 2019.

The reason for the interest increase in fixed income ETFs could be a result of global movements in monetary policy, investors’ hunt for yield and concern over longer term prospects for markets, according to Vanguard. However, the global equity ETF market has rebounded significantly since its difficult Q4, last year.

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Damien Sherman, Vanguard’s head of ETF capital markets, said in a statement: “We saw renewed optimism from investors this quarter following disappointing returns at the end of 2018.

“Vanguard continues to see strong flows, particularly into its broad-based index ETFs which represent a low-cost solution for investors looking to add instant diversification to their portfolios – and this quarter we recorded our strongest start to a year ever with $624 million in inflows.”

As several companies were filing for zero-fee ETFs earlier this year, Vanguard reduced the costs for 10 of its ETFs by one or two bps.

As the Australian ETF market continues to balloon, currently sitting at $45.8bn at the end of Q1 2019, Vanguard accounts for 30.1% of the country’s ETF market share. Vanguard alone saw cash flow worth $624m (33.5% of market) for the period, significantly ahead of iShares and Betashares with $409m (22%) and $403m (21.7%), respectively.

Quarter 1, 2019 ETF market net cash flow by asset class

Asset classCash Flow
($m)
Cash Flow
(% of total market)
International/Global Equity647.537.4
Australian Equity330.419.1
Australian Fixed Income476.927.5
Mixed (Multi-sector)62.63.6
International/Global Fixed Income70.34.1
Infrastructure72.84.2
Commodity-0.60.0
Australian Property75.94.4
International/Global Property9.60.6
Currency-13.9-0.8

Source: Vanguard

International and domestic equity ETFs dominated investors’ preference, accounting for 56.5% of the market’s cash flow. However, Australian fixed income ETFs took more cash than Australian equity, with $476.9m (27.5%) compared to $330.4m (19.1%).