The sum of new money flowing into Australian-listed exchange-traded funds (ETF) doubled in October to $56 million, BetaShares said in its latest ETF review.
“While last month saw investors flocking to asset classes which would result in gains from weakening Australian conditions, increased trading volumes and inflows suggest domestic equities returned to favour for Australian investors this month,” BetaShares head of investment strategy Drew Corbett said.
“Also encouraging was the strong trading and inflows across a variety of asset classes, suggesting investors are using the full range of ETFs available to execute investment strategies.”
Meanwhile, the Australian Securities Exchange (ASX) said total ETF and exchange-traded commodities (ETC) market capitalisation was $5.2 billion, up 7 per cent over the month.
The ETF market capitalisation climbed 9.2 per cent to $4.5 billion as the number of listed ETFs climbed to 50 from 34 a year earlier.
The market cap for ETCs swelled 17.5 per cent to $798 million, as two new ETCs over the year to 31 October brought the total listed ETCs to seven.
“It’s easy to move in and out of ETFs at a low cost, so I imagine that prior to all the drama with Greece, people may have thought that now is the time to start shifting out of cash and back into some of the equity asset classes,” ETF Consulting principal Tim Bradbury said.
“There’s still a massive amount of cash sitting on the sidelines, which, at some point, people need to start reallocating to the asset classes they want to be in over the medium to longer term.”
IShares Australia managing director Mark Oliver said institutional investors were leading the charge after several months of stagnant flows in ASX-listed ETFs.
“What we’ve seen in recent weeks at iShares is something of an uptick in domestic equity usage, but also we see institutions putting a bit of risk back on the table, using offshore products. In some ways, the institutions are something of a canary in the coalmine in terms of taking the earlier steps,” Oliver said.
In its review, BetaShares said monthly trading volumes of iShares’ MSCI Emerging Markets ETF, which trades on the ASX under the code IEM and in New York under EEM, had increased 23 per cent over October to more than $600,000 per day.
“Globally we’ve seen a substantial use of that ETF in recent months,” Oliver said.
“The overseas-listed product has seen flows reignite after a period of risk aversion. Again, it was largely institutional investors, we believe, putting some risk back on the table.”
