The BetaShares Australian ETF Review showed the Australian ETF industry has increased 52.7 per cent, with market capitalisation growing $4.1 billion.
The review showed investors were most attracted to international equities, with ETF products in this category generating $500 million in net inflows during the period.
High yields were also a significant trend, according to BetaShares, attracting over $350 million of net inflows.
Income-orientated products were the most popular during the period, according to BetaShares, with the BetaShares Australian High Interest Cash ETF generating the largest inflows for the period followed by the Vanguard Australian Shares Index ETF.
The Russell Australian Value ETF and the ETFS Physical Gold recorded the largest outflows for the six months.
The review found the best performance for the half came from Australian listed property ETFs and specific commodities, including palladium and oil.
BetaShares said product development activity continued to be low, however, with only three new products launching during the period.
It expects significant new launches in the second half, however, following a slow 12-month period.
BetaShares managing director Alex Vynokur said that despite the relatively low product development activity and subdued price growth in the markets, “investor demand for ETFs has not diminished”.
Mr Vynokur said he expects the rapid market growth to continue into the 2015 financial year.
“The future of the industry looks bright and we retain our original forecast of an industry size of $13-15 billion in funds under management by the end of 2014, most likely at the higher end of this range,” he said.
Mr Vynokur also said the “increasing scrutiny of conflicted remuneration structures, which has come particularly into focus recently, is likely to have a positive flow-on effect for the industry’s growth”.
