The report shows Australia’s ETP industry by market capitalisation has grown by 61 per cent in the 12 months to August, which Market Vectors managing director Arian Neiron attributes to greater market confidence.
“Inflows into global equity ETFs [exchange-traded funds] have increased, reflecting greater confidence in equity markets,” Mr Neiron said.
“We expect strong flows will continue into developed equity markets over the remainder of 2013 and into 2014, given the renewed appetite for growth assets.
“While buying has been focused on US assets, more broadly, Japanese and European share markets are also doing better and are expected to rise on further signs of economic revival.”
The ASX report also showed that average monthly trades have increased by 35 per cent over the last 12 months.
Mr Neiron said the growth of the ETF industry is likely to continue, not only as a result of confidence in the products but as a result of the Future of Financial Advice (FOFA) reforms.
“We are also seeing a significant increase in the use of ETFs by financial advisers as a result of the FOFA reforms effective from 1 July this year and from institutional investors who are using ETFs for cash equalisation or to allow a smooth transition of assets from an outgoing manager to a replacement manager,” Mr Neiron said.
“We think it’s likely that strong growth of Australia’s ETF market will continue, given rising demand from direct investors and self-managed superannuation funds who are using ETFs to broaden their portfolios to include assets which they couldn’t previously access easily.
“These trends are likely to push up the value of the Australian ETF market in 2014 as investors take advantage of the low cost and accessibility of ETFs.”
