BETASHARES AUSTRALIAN ETF REVIEW END OF YEAR REVIEW 2015 & DECEMBER 2015 info@betashares.com.au 1300 487 577 (in Australia) +61 2 9290 6888 (outside Australia) 1
AUSTRALIAN EXCHANGE TRADED FUND INDUSTRY: END OF YEAR REVIEW 2015 The ETF Industry comes of age The global ETF industry had a record year in 2015, collecting a massive US$372B in asset flows and reaching ~US$3T in assets under management (Source: ETFGI) While obviously far smaller than the more mature global ETF markets, our Aussie industry put on a good show too, breaking its own set of records The Australian ETF industry recorded its highest ever annual growth in FuM: $6.4B the previous record, recorded last year, was $5.0B in asset growth Industry funds under management continued to grow rapidly, increasing 42% to end the year at a new record high of $21B, a number which we forecast in our Year End Review for 2014. Perhaps most strikingly of all, almost all the growth (94%) came from net inflows in a year where most stock markets remained flat (or fell). Over the course of 2015, ASX Exchange Traded Funds took in a record $6.0B of new money, up 40% on the net inflows of 2014 ($4.3B). Comparatively the % growth in net inflows was 6.6% into retail managed funds, with ETFs continuing to significantly outpace the growth of the unlisted managed funds industry 1. Trading activity levels also reached record highs, with trading value increasing 61% compared to 2014. Consistent with previous years, the vast majority of the industry s net inflows were captured by the top 4 ranking issuers by net inflows, with ishares, Vanguard, State Street and BetaShares attracting 85% of the industry s net flows. 1 Plan for Life, Inflows for 12 months to end of September Quarter 2015 Retail Managed Funds Industry 2
2015 was, as predicted last year, also the year when new product development activity sped up, with a record number of new products being launched - in total 69 new products launched over the course of the year (vs. 12 in 2014). Exchange Traded Funds capturing the largest amounts of new money over the course of 2015 were revealing in terms of the prevailing investment themes for the year: After several years of consistent #1 ranking inflows by international equities products, 2015 saw a more equal split between Australian equities with broad equities products receiving $1.7B of new money, and developed market international equities which also received $1.7B. While a little slower than 2014, demand for high yield products continued to be high, with ~$570m of new money flowing into Australian high yield equity products. The launch of the first non-transparent actively managed exchange traded products brought with them significant interest, with these types of products attracting ~$500m of net inflows. Interest and activity in European exposures grew substantially in 2015 as the European economies improved, with both heavily increased trading and inflows into European oriented ETFs compared to previous years Outflows were generally very low, and in fact, there was no broad product category that actually received net outflows (for example unhedged gold products received outflows but that was negated by inflows into oil exposures in the commodities category) Best performing exposures for the year were Japanese equities and global consumer staples, followed by global healthcare We believe the industry will continue to grow strongly in 2016 and forecast total industry FuM at end 2016 to be in the range of $28-$30B 3
MARKET SIZE AND GROWTH: CALENDAR YEAR 2015 Australian ETP Market Cap: July 2004 December 2015 (A$m) Market Cap (A$m) $20,000 $15,000 04 15YTD CAGR 32% $10,000 $5,000 $0 Jul-04 Jul-05 Jul-06 Jul-07 Jul-08 Jul-09 Jul-10 Jul-11 Jul-12 Jul-13 Jul-14 Jul-15 Dec-15 #ETPs 7 9 8 5 19 30 37 57 82 81 92 169 CAGR: Compound Annual Growth Rate Source: ASX, BetaShares MARKET CAP ASX Exchange Traded Funds Market Cap: $21.4B new record high Market cap growth for year: 42%,+ $6.4B NEW MONEY New unit growth for year (units outstanding by number): 87% Net new money (units outstanding by $ value): +$6.0B PRODUCTS 169 Exchange Traded Products trading on the ASX New products: 69 new products launched in the year (vs. 12 in 2014), 1 product closed record number of new products launched TRADING VALUE Trading value increased 61% compared to 2014 record trading year for ETFs PERFORMANCE Japanese equities and global sectors (consumer staples and healthcare), the best performing products over 2015 4
TOP 10 PRODUCTS: END OF YEAR 2015 TOP 10 Products 31-Dec-15 By Market Cap Ticker Product Issuer Market Cap (this month Rank Movement since Dec 2014 STW AU Equity SPDR S&P/ASX 200 Fund State Street $3,201,990,000 - IVV AU Equity ishares S&P 500 ishares $2,006,590,000 - VAS AU Equity Vanguard Australian Shares Index ETF Vanguard $1,333,310,100 1 IOO AU Equity ishares S&P Global 100 ishares $1,062,710,000-1 VTS AU Equity Vanguard US Total Market Shares Index ETF Vanguard $809,015,000-2 AAA AU Equity Betashares Australian High Interest Cash ETF BetaShares $792,813,000-1 IEU AU Equity ishares S&P Europe 350 ishares $627,190,000 +6 SLF AU Equity SPDR S&P/ASX 200 Listed Property Fund State Street $599,000,000-2 VHY AU Equity Vanguard Australian Shares High Yield ETF Vanguard $598,941,000-1 VEU AU Equity Vanguard All-World ex-us Shares Index ETF Vanguard $583,575,000 +2 Other products with > $300m AUM: VAP, USD, SFY, IXJ, MGE, IOZ, Gold, YMAX, IEM, ILC, ishares S&P Europe 350 & and Vanguard s All-World ex-us Shares Index, the fastest movers in the Top 10 list. Top 10 Creations (by $) - 2015 Ticker Product Creation Value STW AU Equity SPDR S&P/ASX 200 Fund $855,581,317 VAS AU Equity Vanguard Australian Shares Index ETF $509,981,857 MGE AU Equity Magellan Global Equities Fund (Mgd Fund) $430,599,781 IEU AU Equity ishares S&P Europe 350 $290,329,658 VEU AU Equity Vanguard All-World ex-us Shares Index ETF $239,947,145 VTS AU Equity Vanguard US Total Market Shares Index ETF $208,991,506 VAF AU EQUITY Vanguard Australian Fixed Interest ETF $205,785,565 VHY AU Equity Vanguard Australian Shares High Yield ETF $201,965,868 IXJ AU Equity ishares S&P Global Healthcare $181,808,965 VAP AU Equity Vanguard Australian Property Securities Index ETF $168,330,182 Top 10 Redemptions (by $) - 2015 Ticker Product Redemption Value Gold AU Equity ETFS Physical Gold ($47,493,920) RSM AU Equity Russell Australian Semi-Government Bond ETF ($31,200,006) IZZ AU Equity ishares FTSE/Xinhua China 25 ($27,183,808) ISO AU Equity ishares S&P/ASX Small Ordinaries ($26,196,704) SPY AU Equity SPDR S&P 500 ETF TRUS ($16,875,028) QRE AU Equity BetaShares S&P/ASX 200 Resources ETF ($5,120,723) QFN AU Equity BetaShares S&P/ASX 200 Financials-x-A-REIT ETF ($1,132,578) SSO AU Equity SPDR S&P/ASX Small Ordinaries Fund ($1,104,611) By Average Daily Trading Value (12 mths) Ticker Product Issuer ADTV 12 mth Rank Movement: YoY STW AU Equity SPDR S&P/ASX 200 Fund State Street $12,987,705 - IVV AU Equity ishares S&P 500 ishares $6,204,061 - AAA AU Equity Betashares Australian High Interest Cash ETF BetaShares $5,494,817 - VAS AU Equity Vanguard Australian Shares Index ETF Vanguard $4,862,236 - USD AU Equity BetaShares US Dollar ETF BetaShares $4,096,464 - IEM AU Equity ishares Emerging Markets ETF ishares $3,849,326 - IEU AU Equity ishares S&P Europe 350 ETF ishares $2,775,721 +5 IOO AU Equity ishares S&P Global 100 ETF ishares $2,157,968-1 VTS AU Equity Vanguard US Total Market Shares Index ETF Vanguard $2,045,709 +2 IZZ AU Equity ishares FTSE China ETF ishares $2,004,860 +11 Top movers in trading activity were ishares FTSE China ETF (although trading activity was net selling) and ishares S&P Europe 350 ETF. 5
Top 5 Category Inflows (by $) - 2015 Category Inflow Value Aus. Equities - Broad $1,742,610,546 International Equities - Developed $1,703,072,248 International Equities - Global $735,808,764 Aus. High Yield $570,709,073 Aus. Fixed Income $325,665,468 Strikingly, there were no outflows at a category level, with any outflows at a product level negated by inflows by other products in the same category Top Performing Products 2015 Ticker Product Name Performance (%) IJP ishares MSCI Japan 19.1% IXI ishares S&P Global Consumer Staples 17.0% IXJ ishares S&P Global Healthcare 15.9% QUAL Market Vectors MSCI World Quality 14.0% USD BetaShares U.S. Dollar ETF 12.0% 6
AUSTRALIAN EXCHANGE TRADED FUND INDUSTRY: MONTH OF DECEMBER 2015 MARKET CAP & NEW MONEY Market cap growth for month: 1.9%,+ $387.5m New unit growth for month (units outstanding by number): 5.0% Net new money (units outstanding by $ value): +$344.8m 9 new products launched this month TRADING VALUE Trading value increased 7% month on month PERFORMANCE BetaShares Geared Australian Equity Fund and Property Sector funds the best performing products TOP 10 PRODUCTS: DECEMBER 2015 By Average Daily Trading Value (20 days) Ticker Product Issuer ADTV 20 days Rank Movement STW AU Equity SPDR S&P/ASX 200 Fund State Street $19,612,990 - IVV AU Equity ishares S&P 500 ishares $6,307,405 +1 VAS AU Equity Vanguard Australian Shares Index ETF Vanguard $5,549,840-1 USD AU Equity BetaShares US Dollar ETF BetaShares $3,310,310 +1 BBOZ AU Equity BetaShares Australian Equities Strong Bear Hedge Fund BetaShares $3,119,993 +9 GEAR AU Equity BetaShares Geared Australian Equity Fund BetaShares $3,015,936 +11 SFY AU Equity SPDR S&P/ASX 50 Fund State Street $2,495,872 +11 MGE AU Equity Magellan Global Equities Fund (Mgd Fund) Magellan $2,331,398-1 AAA AU Equity Betashares Australian High Interest Cash ETF BetaShares $2,204,779-5 VHY AU Equity Vanguard Australian Shares High Yield ETF Vanguard $2,201,127 +2 Top 10 Creations (by $) - Month Ticker Product Creation Value STW AU Equity SPDR S&P/ASX 200 Fund $97,547,800 MGE AU Equity Magellan Global Equities Fund (Mgd Fund) $53,495,505 VAS AU Equity Vanguard Australian Shares Index ETF $33,884,344 VAE AU Equity Vanguard FTSE Asia ex-japan Shares ETF $22,259,400 MVW AU Equity Market Vectors Australia Equal Weight $16,765,120 USD AU Equity BetaShares US Dollar ETF $13,186,485 QUAL AU Equity Market Vectors MSCI World Quality $10,799,768 SFY AU Equity SPDR S&P/ASX 50 Fund $10,028,880 UMAX AU Equity BetaShares S&P 500 Equity Yield Maximiser Fund $8,913,100 NDQ AU Equity BetaShares Nasdaq 100 ETF $8,903,520 Top Redemptions (by $) - Month Ticker Product Redemption Value IAF AU EQUITY ishares UBS Composite Bond Index Fund ($20,041,656) BEAR AU Equity BetaShares Australian Equities Bear Hedge Fund ($7,197,160) ILC AU Equity ishares S&P/ASX 20 ($6,481,143) IHK AU Equity ishares MSCI Hong Kong ($3,349,616) IEM AU Equity ishares MSCI Emerging Markets ($1,958,051) IAA AU Equity ishares S&P Asia 50 ($1,926,541) IBK AU Equity ishares MSCI BRIC ($1,698,104) WDIV AU Equity SPDR S&P Global Dividend Fund ($1,696,570) CETF AU Equity Market Vectors ChinaAMC A-Share ETF ($568,571) ISG AU Equity ishares MSCI Singapore ($432,267) Top 5 Category Inflows (by $) - Month Category Inflow Value Aus. Equities - Broad $162,559,621 International Equities - Global $58,148,513 International Equities - Developed $57,135,991 International Equities - Emerging Markets $16,107,440 Currency $13,714,480 7
TopCategory Outflows (by $) - Month Category Outflow Value Short ($5,375,170) Top Performing Products Month Ticker Product Name Performance (%) GEAR BetaShares Geared Australian Equity Fund 6.1% MVA Market Vectors Australian Property 4.6% MVB Market Vectors Australian Banks 4.1% VAP Vanguard Australian Property Securities 4.0% ETPMPT ETFS Physical Platinum 4.0% 8