As we've documented extensively here at The Motley Fool, 2021 has turned out to be a year of enormous success for the exchange-traded fund (ETF) sector. Last month, the BetaShares Crypto Innovators ETF (ASX: CRYP) broke ETF trading volume records on its first day of trading. We have seen record inflows and funds under management (FUM) several times this year. But we have also seen the ASX debut of many new ETFs. Just last week, the ASX welcomed the BetaShares Electric Vehicles and Future Mobility ETF (ASX: DRIV).
But could 2022 be even better for the ETF sector? ETF provider BetaShares certainly thinks so.
The fund manager has just released a new industry report into the ETF sector. It shows that "the Australian ETF market is set to continue to grow strongly next year". The BetaShares/Investment Trends ETF Report 2021 found that the number of Australian investors who now hold one or more ETFs in their investment portfolios, ballooned in 2021. It rose 33% over 2020's numbers. More than 1.73 million Aussies now hold an ETF in their portfolios.
2 million ETF holders in Australia…
However, the report finds that another 275,000 Aussies want to start using ETFs in the next 12 months or so. That would push the number of Australian investors holding an ETF to more than 2 million. That would be yet another record high if realised. Here's some of what BetaShares CEO Alex Vynokur had to say on the report's findings:
The data confirms that ETFs are increasingly the investment vehicle of choice for both experienced and first-time Australian investors seeking to build their wealth. A growing number of investors continue to be drawn to ETFs as a way of building their wealth and achieving their financial goals.
We're also seeing that ETFs have reached mainstream adoption in Australia, with a notable rise in younger and increasingly female investors, who see value in a simple-to-access, transparent and cost-effective way of building their investment portfolios…
2022 is shaping up for another strong year of growth, and I believe the industry is on track to hit $180 billion in FUM by the end of next year. [That's] up from approximately $130 billion today.
Reportedly, the number of investors using ETFs as a 'core' of their portfolios was only 4% in 2019. But as of 2021, this has increased to 27%. Diversification has been a primary driver here, with 'avoiding individual stock exposure risk' and 'saving time' also contributing to ETF demand, particularly for newer investors.
So it looks as though ETFs are set to continue to blow the lights out on all fronts next year. If this report's predictions come to pass, anyway. So make sure to keep an eye on the ETF sector next year. It looks like ETFs will remain one of the hottest trends on the ASX boards in 2022 as well.
