Aviva has seen an increase in demand for index funds on its platform Navigator, a recent company survey of gross inflows and outflows has found.
In the second quarter of 2009, the Vanguard Australian Index fund ranked as the third most commonly used equity fund on the platform, attracting 8 per cent of total gross equity inflows.
Over the full year to 30 June 2009, this fund ranked only fifth, while its inflows represented 6 per cent of total gross equity inflows.
"The indexing approach that Vanguard utilises, and they certainly run a good deal of education in the market about that approach, is gradually gaining further traction," Aviva distribution development manager Stuart Fechner told InvestorDaily.
The survey also showed that the popularity of term deposits and cash funds declined in the second quarter.
Term deposits represented 16 per cent of total gross fund inflows in the second quarter, compared to 23 per cent over the 12 months to 30 June 2009.
On a net flow basis, only one cash fund - the UBS Cash Fund - sat within the top five, whereas across 2008/09 there were four in the top five.
"It's no surprise to see such a strong level of support for cash-based products over the full financial year, but I do believe that we've now seen the peak," Fechner said.
"Even investments that are directed to term deposits are now heading into three-month terms rather than 12 month terms," he said.
Some of the money previously invested in cash has made its way to the equity market.
"[This trend] is not as yet overwhelming, but it's there," Fechner said.
