Aussie ETF industry tipped for continued strong growth
Australia’s exchange-traded fund industry reached new records in 2025, with further growth expected in 2026 for the innovative investment vehicle.
Assets under management for Australian ETFs surpassed $300 billion in September, reaching $324.9 billion at the end of November after starting the year at $247 billion.
“To put this in context, it took 21 years for the domestic ETF market to reach the first $100 billion in assets, another three years to reach $200 billion, and then just 15 months to reach $300 billion,” said Arian Neiron, CEO and managing director of VanEck’s Asia Pacific division.
“Based on a conservative assumption of compound annual growth of roughly 20 per cent over the next five years, we see the sector growing to over $750 billion by 2030,” he told AAP.
An estimated 411,000 Australians will start investing in ETFs in 2025, reaching 2.7 million, according to a survey of 1,505 financial advisors and 1,770 ETF investors released by Betashares in December.
The Australian ETF issuer expects three million Australians to invest in ETFs by the end of 2026, with assets under management to exceed $500 billion by the end of 2028.
For those who don’t know, ETFs are investment vehicles that offer ownership in stocks, commodities, precious metals, debt, property or other underlying assets such as cryptocurrency.
They trade just like stocks on exchanges such as the Australian Securities Exchange, making them easy to buy and sell quickly and investors to instantly determine the value of their holdings without having to wait for a monthly or quarterly release.
“The ETF-listed structure clearly seems to be the preferred way for many direct investors, SMSF investors, financial advisors, brokers to realize their portfolio ideas,” said Tim Bradbury, head of Australian brokerage at State Street Investment Management, the world’s third-largest ETF issuer.
State Street was the first Australian ETF issuer to launch its flagship SPDR S&P/ASX200 ETF in August 2001, which was trading at just over $77 per head in early December.
“This is an ETF that gives you exposure to 200 underlying securities for five basis points, which when you think about it costs $5 in management fees for every $10,000 an investor invests,” Mr. Bradbury said.
“As an investor, managing costs is really important.”
As of November, there were 459 ETFs in Australia; 69 of this number, 64 in 2024, were released in 2025.
Mr. Neiron said “smart beta” ETFs have attracted significant interest in 2025, with assets under management exceeding $50 billion, and VanEck expects that figure to double to $100 billion by 2029.
Rather than passively following an investment theme, “smart beta” ETFs take a rules-based approach when selecting investments and continue to offer the low fees traditional passive ETFs are known for.
For example, an equally weighted smart beta ETF for the S&P/ASX200 benchmark index will invest the same amount in each company regardless of size, while a traditional ASX200 index fund will invest more heavily in the largest companies such as CBA and BHP.
Other smart beta ETFs have investment rules regarding momentum or dividends.
The key word for 2026 is selectivity, Mr. Neiron said.
“Capital growth and income opportunities should remain available for ETF investors who take selective approaches and prioritize asset valuations above management fees,” he told AAP.
“Low cost remains important, but understanding underlying asset valuation and earnings potential will be critical in a market where volatility is likely to continue.”
Mr Bradbury said another ETF theme that was particularly strong in Australia was around yield, or income generated.
“It’s changing a little bit,” he told AAP.
“More traditionally it’s ‘How can I get my exposure through government bonds or some corporate bonds?’ However, we now see that returns are sought in many different ways, locally and globally.”
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