Q WHAT TRENDS MIGHT WE SEE IN ETFS?

The major theme for 2019 will be similar to the one for 2018: growth. This year Australian ETFs reached over $45.5 billion of assets but that is still less than 2% of the total super and investable asset pie. ETFs’ low cost and diversification will continue to grab the attention of self-directed investors and we expect plenty more growth to come.

There has been a recent trend towards new “active” ETF options; however, we think their performance will disappoint investors in 2019. The Stockspot ETF Report found that in 90% of cases simple, low-cost broad-market ETFs beat more expensive active ETFs.

2018 saw Chinese sharemarket ETFs nosedive, losing 30% of their value, following Donald Trump’s trade war rhetoric and tariffs on imported Chinese goods. Contrarian investors will be looking at this as a good opportunity to reduce holdings in US share ETFs, such as iShares Core S&P 500, which have performed well, and move into Chinese share ETFs such as iShares China Large-Cap. We currently have four times more clients invested in US share ETFs compared with Chinese share ETFs. However, we expect this to converge in 2019.

Chris Brycki,

CEO and founder, Stockspot