BlackRock, Vanguard scoop up ASX 200 shares

US index fund management giants BlackRock and Vanguard were the largest buyers of ASX 200 shares in the March quarter.

BlackRock and Vanguard were the largest buyers of ASX 200 shares in the March quarter, according to a new report by Orient Capital. Picture: NCA NewsWire / Damian Shaw

US index fund management giants BlackRock and Vanguard were the largest buyers of ASX 200 shares in the March quarter, according to a new report by Orient Capital, the investor relations arm of the Link Group.

The report shows that each of the big US funds, which both specialise in index investing, bought about $6.5bn worth of Australian shares in the first three months of the year.

Sydney-based Macquarie Asset Management increased its holdings of ASX 200 shares by $4.6bn after finalising a deal to buy AMP Capital’s global equities and fixed income business on March 28.

The report shows Boston-based fund manager State Street was the next biggest player in the Australian market, with State Street Global Advisors in Sydney investing some $4.4bn in the Australian market and State Street Global Advisors in Boston buying another $3.1bn. The report shows that two industry super fund groups were among the top five sellers of Australian shares during the quarter.

UniSuper sold almost $3bn worth of shares, making it the biggest seller on the Australian market over the quarter, while IFM Investors sold $1bn worth.

Some of these share sell-offs were due to takeover activity during the quarter.

Other big sellers in the Australian sharemarket over the quarter were Seattle-based fund manager Parametric Portfolio Associates which sold $2.3bn in ASX 200 shares and New York-based Davidson Kempner Capital Management which sold $700m-worth during the quarter.

Fund managers made up 81 per cent of the institutional buyers and sellers in the Australian sharemarket with super funds making up almost 9 per cent.

The report says institutional investors from North America, Asia, Britain and Europe were the biggest share buyers in the region while Australian institutional investors were the biggest sellers of shares in the region.

The S&P/ASX 200 Index ended the March quarter with a gain of 0.7 per cent.

Some large-scale takeover activity involving ASX-listed companies during the quarter drove the sell-off of Australian shares by Australian super funds, while international investors increased their holdings in the energy sector, which was the best performer in the quarter on the ASX.

The report shows that ordinary Australian investors stepped up their buying of ASX 200 shares during the pandemic.

Direct retail investor ownership of ASX 200 shares rose from around 27 per cent in 2020 to 31 per cent this year. The big increase was in shares in energy and utility companies, where Orient says there was a “noticeable increase” in the retail shareholder base.

But total retail share ownership in Australia is still down over the past five years from a high of 34 per cent of the total share value of ASX200 companies.

The report notes that holdings of Australian shares by industry super funds are consolidating following continued mergers in the sector. The new Australian Retirement Trust, formed from the merger of SunSuper and QSuper, now has a combined holding of $41bn worth of ASX 300 shares out of a total combined fund portfolio of around $200bn.

The merger of construction industry super fund Cbus and Media Super, which was finalised in April, sees the combined group hold $15bn worth of ASX 300 shares out of their total combined portfolio of $75bn.