ASX ETF sector continues to boom and hit record highs

ETFs just keep getting bigger.

A small boy stands at the base of a massive tree trunk and stares up into the sky with head stretched back.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The rise in popularity of the exchange-traded fund (ETF) as an investment vehicle on the ASX is not a new one. We have covered ASX investors' seemingly insatiable appetite for ETFs many times here on the Fool.

But the age of the ETF might only be getting started, going off of the latest data.

According to ETF provider BetaShares, the ASX just had its best month ever in terms of ETF inflows. BetaShares' latest Australian ETF Review covers the month of September, and it makes for some interesting reading for any ETF (or investing) enthusiast.

The report found that September ended up experiencing the highest monthly net inflows on record for the ETF industry, with the entire ETF sector swelling by an unprecedented $2.9 billion over the month just passed. There are now $125.3 billion in ETF funds under management on the ASX, another record high.

Incredibly, BetaShares reckons the ETF market in Australia has grown by a compounded average growth rate of 46% per annum between July 2001 and September 2021. The growth rate over the past 12 months to September alone was 76%.

September also saw $9 billion in trading activity alone, matching the previous highs seen in March 2020. If you remember, March 2020 saw the worst of the COVID crash that dominated investor sentiment last year.

Which ASX ETFs got the most love from investors?

The ETFs which experienced the highest fund inflows in September were:

  1. BetaShares Australian High Interest Cash ETF (ASX: AAA) with $361.68 million in inflows
  2. iShares Core S&P/ASX 200 ETF (ASX: IOZ) with $313.01 million
  3. Vanguard Australian Shares Index ETF (ASX: VAS) with $195.41 million

Meanwhile, the top-performing ETFs over September were:

  1. ETFS Ultra Short Nasdaq 100 Hedge Fund (ASX: SNAS), up 14.1% over the month
  2. BetaShares US Equities Strong Bear Hedge Fund (ASX: BBUS), up 11.4%
  3. BetaShares Crude Oil Index ETF (ASX: OOO), up 9.8%

Interestingly, the top two performers were geared (leveraged) inverse ETFs, which are designed to rise in value when the broader markets fall. That makes sense since the US markets had a pretty dreadful month over September, as did the ASX 200. BetaShares characterised this trend as investors "buying the dip" using ETFs.

If the ETF sector keeps growing even when markets are falling, it certainly bodes well for its future.

Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on ETFs

A male investor sits at his desk looking at his laptop screen holding his hand to his chin pondering whether to buy Macquarie shares
Technology Shares

One ASX share to buy right now after the US market pullback

With US markets retracing overnight, I think this ASX share is one to buy right now.

Read more »

Man on computer looking at graphs
ETFs

How much do you need to invest in the Vanguard Australian Shares Index ETF (VAS) for $10,000 in annual dividends?

Can the VAS ETF deliver a high distribution payout?

Read more »

Businessman at the beach building a wall around his sandcastle, signifying protecting his business.
ETFs

How does the VanEck Wide Moat ETF return 17% per annum?

How does this ETF consistently deliver such high returns?

Read more »

two women looking intently at computer screen
ETFs

The pros and cons of buying this ASX tech ETF after its 30% rally

Should investors be excited by this tech fund?

Read more »

A man thinks very carefully about his money and investments.
ETFs

Buy these ASX ETFs for a big income boost

These funds offer investors a nice source of income.

Read more »

A white and black robot in the form of a human being stands in front of a green graphic holding a laptop and discussing robotics and automation ASX shares
ETFs

What's under the hood of the new AI ETF on the ASX?

The Aussie stock market just got a little more 'artificially intelligent' with the launch of a new ETF.

Read more »

Cropped shot of a mature businessman brainstorming and setting financial goals with notes on a glass wall.
ETFs

Why this is my top Vanguard ETF to buy for the long-term

Diversification and growth are what I’m looking for.

Read more »

Magnifying glass on ETF text next to a calculator and notepad.
ETFs

10 ASX ETFs with the lowest management fees and why it matters

Management fees eat into your returns so it's important to compare them when selecting ASX ETFs to buy.

Read more »