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10 hottest (and coldest) Aussie ETFs right now

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The Australian exchange-traded fund (ETF) industry shows no signs of slowing down, with 3 funds attracting nine-figure amounts from investors last month.

Investors put in the highest-ever amount of dollars into local ETFs in October, but some products fared far better than others.

A BetaShares report showed cash, bond and fixed interest ETFs featured prominently among the top 10 ETFs that saw the largest inflow of cash last month. 

This perhaps indicated some anxiety with investors about the US election result and sky-high share valuations.

Top 10 hottest Australian ETFs

ETF October 2020 inflow
iShares Core S&P/Asx 200 Etf (ASX: IOZ) $326 million
Vanguard Australian Shares Index ETF (ASX: VAS) $197.1 million
Vanguard Global Aggregate Bond Index (Hedged) ETF (ASX: VBND) $101.2 million
Vanguard Msci Index International Shares Etf (ASX: VGS) $95.3 million
Betashares Australian High Interest Cash ETF (ASX: AAA) $88.3 million
Vanguard Australian Fixed Interest Index ETF (ASX: VAF) $84.3 million
iShares Core Composite Bond ETF (ASX: IAF) $77.5 million
Betashares Nasdaq 100 ETF (ASX: NDQ) $54 million
iShares S&P 500 AUD Hedged ETF (ASX: IHVV) $51.7 million
Betashares Asia Technology Tigers ETF (ASX: ASIA) $50.3 million
Source: BetaShares; Table created by author 

ETF pioneer Vanguard dominated the top of the charts. 

Its Vanguard Australian Shares Index ETF (ASX: VAS), Vanguard Global Aggregate Bond Index (Hedged) ETF (ASX: VBND), Vanguard Msci Index International Shares Etf (ASX: VGS), and Vanguard Australian Fixed Interest Index ETF (ASX: VAF) collectively brought in about $478 million for the company.

But the most attractive fund of October, iShares Core S&P/Asx 200 Etf (ASX: IOZ), alone pulled in a stunning $326 million of investor funds.

Top 10 coldest Australian ETFs

At the other end of the charts, foreign assets seemed to go out of favour with Australian ETF investors.

The trend could be a validation of the successful suppression of COVID-19 in Australia while the northern hemisphere copped a third wave as it headed into the colder months.

ETF October 2020 outflow
Ishares Edge MSCI World Multifactor ETF (ASX: WDMF) $50.7 million
BetaShares Australian Resources Sector ETF (ASX: QRE) $34.8 million
iShares MSCI South Korea ETF AUD (ASX: IKO) $19.5 million
BetaShares Geared Australian Equity (Hedge Fund) (ASX: GEAR) $7.06 million
iShares Core Cash ETF (ASX: BILL) $7.02 million
BetaShares US Dollar ETF (ASX: USD) $6.4 million
BetaShares Australian Equities Bear Hedge (ASX: BEAR) $5.8 million
ETFS S&P/ASX 300 High Yield Plus ETF (ASX: ZYAU) $3.6 million
iShares Europe ETF AUD (ASX: IEU) $3.4 million
Platinum International Fund (Quoted Managed Hedge Fund) (ASX: PIXX) $2.8 million
Source: BetaShares; Table created by author 

iShares Edge MSCI World Multifactor ETF (ASX: WDMF), iShares MSCI South Korea ETF AUD (ASX: IKO), BetaShares US Dollar ETF (ASX: USD), iShares Europe ETF AUD (ASX: IEU) and Platinum International Fund (Quoted Managed Hedge Fund) (ASX: PIXX) all suffered significant outflows.

BetaShares itself had $34.8 million pulled out of its BetaShares Australian Resources Sector ETF (ASX: QRE), which was the 2nd highest amount.

It’s often hard to pinpoint the exact reasons for outflows from a particular ETF, BetaShares head of strategy Ilan Israelstam told The Motley Fool.

“Investors will have their own motivations for increasing or reducing their positions,” he said.

“On QRE in particular, our suspicion is that most of the selling was due to investors taking profits, given QRE was up around 34% from its lows in March.”

Betashares and AMP Limited (ASX: AMP) recently closed down a trio of ETFs they jointly operate due to a lack of investor interest. Those funds will trade on the ASX for the last time on 4 December.

The last two months have been the only time in history that the Australian ETF industry saw more than $2 billion come inwards each month.

Local ETFs collectively manage $73.8 billion, which is another all-time record.

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Returns as of 15th February 2021

Tony Yoo owns shares of Vanguard MSCI Index International Shares ETF. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of BETANASDAQ ETF UNITS. The Motley Fool Australia owns shares of and has recommended BetaShares Asia Technology Tigers ETF. The Motley Fool Australia has recommended BETANASDAQ ETF UNITS and Vanguard MSCI Index International Shares ETF. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Tony Yoo