Growth Without Displacement: Where Australia’s Next ETF Demand Could Emerge

Preview

Australia is charting a different path for ETF growth. While respondents in the U.S. and Europe expect to pull back from mutual funds and UCITS, Australian advisers plan to increase their use of both ETFs and managed funds. The market is broadening rather than consolidating, making the choices advisers make across products, structures and exposures important signals of where demand could go next.

• Managed funds and ETFs grow together, but compete at the product level: 73% of respondents plan to increase their use of active ETF and 55% expect to use managed funds more. Yet when considering an active ETF from a manager they already use, 53% say the allocation would most likely come from an existing managed fund.
• Adviser demand for active is running ahead of the products: Adviser preference for active management does not always align with where active ETFs are widely used today.  Multi-asset, emerging markets and thematic strategies reveal some of the clearest gaps, suggesting where demand may be building.
• Differentiation can command a premium: Fees matter, but advisers weigh cost against what an ETF gives them access to and what stands behind it. They show greater willingness to pay for harder-to-access and differentiated exposures, while the manager and index behind the product can also shape the choice between otherwise similar products.

The findings point to a market expanding on several fronts, with more capital, more structures and more categories of exposure competing for a place in the portfolio. That makes advisers’ choices worth watching closely, not just how much they allocate to ETFs, but which ones, and why.

The full report goes further, examining adviser preferences by category, comparing Australian findings against the U.S. and Europe, and detailing where advisers still see the limits to the ETF structure, including private markets and tokenization.