Alex Vynokur’s ETF provider Betashares hits $20bn milestone

A year and a half after topping $10bn in funds under management, ETF provider Betashares has sailed past the $20bn mark.

Betashares founder and CEO Alex Vynokur: ‘Change is the only constant in this world.’ Picture: Hollie Adams

A year and a half after topping $10bn in funds under management, ETF provider Betashares has sailed past the $20bn mark. Founder and CEO Alex Vynokur is now eyeing the next big milestone, while also looking over his shoulder.

“The growth has been incredible. But relative to its potential, it still feels to me like we’re just getting started,” Mr Vynokur said.

“The last thing I want to do is to develop a sense of entitlement, or hubris, that we can just continue doing the same thing over and over again and still see growth.”

Mr Vynokur, who founded the business in 2009, said he spent a lot of time thinking about the evolving needs of his customers.

“I’m very paranoid, and we as a business are very (paranoid), in the most positive sense of that word, that a new technology, a new way of investing, may make us redundant.

“In 10 or 20 years it is quite possible that ETFs will be superseded by something different: by something new, something that delivers even better transparency, even better value for money.”

It would be foolish for a disrupter not to expect change, he said.

“Change is the only constant in this world. But over the next 10 years, I think there will be tremendous growth in the ETF industry. And we as a business will continue growing and adapting.”

One way the business is adapting is by exploring the prospect of a cryptocurrency ETF.

While there are no providers offering crypto ETFs in the local market, the corporate cop in recent months has been consulting with the industry on such funds.

It is seen by many as a matter of time before an ASX-listed crypto ETF is available to investors.

“The regulatory environment is not yet at a point where we’re able to launch, but we have been working constructively with the regulator in relation to the framework of rules that would need to apply in order for digital asset ETFs to operate.”

Offering access to these types of asset classes within a regulated environment was preferable to investor exposures on unregulated exchanges, he added.

“We are believers that more regulation is actually a good thing. And we think a regulated environment is going to reinforce confidence and trust and effectively will be the bridge between what had previously been an unregulated industry and the next phase, which is more maturity, more regulation and more widespread adoption.”

The booming ETF sector in Australia now boasts well over $115bn in market cap, after recording the fastest annual growth on record, with Betashares capturing 25c of every Australian dollar invested.

The phenomenal growth is due to both asset appreciation, as equities surged following the crash of February and March 2020, and a flood of new money hitting the market.

For Mr Vynokur, the performance of ETFs through the market collapse and subsequent recovery was vindication that the industry deserved its place in the mainstream.

“Over time, naysayers, in particular active managers, have come out (against ETFs) saying, ‘Just wait until there’s another period of market turbulence or volatility, ETFs have not been tested in that sort of environment’.

“So it’s been really pleasing that the industry has passed yet another test.”

The Australian ETF industry rode the market recovery through 2020, growing by nearly 60 per cent to 720,000 investors over the year. Expectations are it will add another 190,000, or 26 per cent, this year.

ETF investors are also getting younger, with first timers increasingly under the age of 40.

Investors were attracted to the products because of their transparency, liquidity and value for money, Mr Vynokur said.

It’s also an easy way of getting access to international markets.

Out of its more than 60 ETFs on offer, Betashares’ NASDAQ 100 and Asia Technology Tigers had the biggest inflows as investors chased the tech boom.

Originally published as Alex Vynokur’s ETF provider Betashares hits $20bn milestone