What's going so wrong for ASX ETFs in 2022 so far?

2022 hasn't been the best for ASX ETFs so far…

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Key points

  • ASX exchange-traded funds had a spectacular 2021
  • But 2022 has proven to be a different beast for ETFs
  • Let's take a look at how the sector has fared over the year so far...

What could possibly go wrong with the ASX exchange-traded fund (ETF) sector? ETFs had a spectacular year last year, recording both record inflows and funds under management. So it might come as a surprise to hear that 2022 hasn't been quite as kind as of yet.

According to the new Australian ETF Review from ETF provider BetaShares, ASX ETFs have indeed had a rough start to 2022. Although inflows towards ASX ETFs were still positive over January 2022, it wasn't enough to stem the outflowing tide from global markets. According to BetaShares, total funds under management for the sector fell 3.7% over January. That represents a loss of $5.1 billion in funds under management. That left the ASX ETF sector with a total of $131.8 billion in funds under management at the end of January.

That was despite the launch of two new active ASX ETFs during the month, bringing the total number to 282 on the ASX. As an aside, BetaShares is expecting active ETF launches to remain "very frequent" throughout the rest of the year.

ASX ETFs suffer as global markets fluctuate

But even though ASX ETFs had a rough January overall, the sector has still grown by 36%, or $35.5 billion, over the past 12 months.

BetaShares also noted that monthly trading value over January increased by a hefty 26% to $10.3 billion. That's reportedly the second-highest monthly level on record.

So which ETFs were investors buying and selling over January? The research tells us that the BetaShares Australia 200 ETF (ASX: A200) was the most popular ETF by inflows over the month that was. A bit over $300 million found its way into A200. Next up was the Vanguard Australian Shares Index ETF (ASX: VAS), with slightly more than $220 million. Following that, we had the Vanguard MSCI Index International Shares ETF (ASX: VGS) with roughly $118 million in inflows.

Conversely, the iShares S&P/ASX 200 ETF (ASX: IOZ) saw the largest outflows over January, with more than $353 million leaving that fund. Other ETFs experiencing outflows were mostly bond, or fixed-interest funds. Those included the iShares Core Composite Bond ETF (ASX: IAF) and the iShares Treasury ETF (ASX: IGB). 

So another interesting month for ASX exchange-traded funds over January. The sector is clearly not immune from the market volatility we have seen over 2022 thus far. But it arguably is also showing resilience too. It will be interesting to see what the rest of 2022 brings to ASX ETFs. 

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. owns and has recommended Vanguard MSCI Index International Shares ETF. The Motley Fool Australia has recommended Vanguard MSCI Index International Shares ETF. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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