The SSgA SPDR Global ETF Snapshot indicated the Australian ETF market has outpaced the global rate of ETF growth, with assets under management for Australian ETFs increasing 11 per cent to $11.5 billion.
Australian ETF growth was also higher for May, with funds under management for Australian ETFs increasing 2.6 per cent compared to the 2.4 per cent increase for global ETFs.
The US had the greatest inflows during May of all regions, with $12.5 billion in inflows, followed by Europe with $5.6 billion and APAC with $1.4 billion.
SSgA said fixed income was the dominant ETF category in May with inflows of US$14.4 billion bringing year-to-date totals to over US$40.7 billion.
SSgA head of SPDR ETFs Australia Amanda Skelly said global ETF investors are using fixed-income investments for a variety of reasons including “income, duration and importantly, to reduce overall portfolio volatility”.
“This has included broad-based bonds for diversification benefits, corporate and EM bonds for income and government bonds for duration,” said Ms Skelly.
She said this trend differs from Australia where interest in bonds is still limited.
“Australia-based investors are starting to recognise the benefits bonds offer outside of just income, but continued investor education is vital to seeing demand increase,” she said.
According to SSgA international equities, Australian large cap and broad market equities continue to be favoured by Australian investors, which has contributed significantly to the growth of Australian ETFs.
“Australian equity-based ETFs saw the largest inflows all year, indicating positive market sentiment despite expectations of softer domestic growth for the remainder of the year,” said Ms Skelly.
