The Australian ETF market is expanding to accommodate growing demand for international exposure, with a focus on fast-growing Asian economies, according to ETF Securities.
Launching the latest ETF Landscape report, which provides a quarterly update on the ETF market, Kris Walesby, chief executive of ETF Securities, commented that investors are looking to diversify their portfolios by using ETFs to gain exposure to international shares and fixed income.
“The market for ETFs has grown rapidly and as at 31 October, the ETF market size was $56.9 billion, which has grown from $40.4 billion at the start of the year,” Ms Walesby said.
“What stands out this year is the increased number of ETFs launched that provide investors exposure to international markets.”
The ASX is now home to three Chinese equity ETFs, and one each for Taiwan and South Korea.
The report has been released after ETF Securities partnered with Indian fund manager Reliance Nippon Life Asset Management in June to launch what they reported to be Australia’s first India equities ETF.
In August, a second Indian equity ETF was added to the ASX.
ETF Securities’ fund invests in the Nifty50 Index, the most popular Indian equity market benchmark.
Launched in 1995, the Nifty50 is one of the most traded indexes in the world – over 23 years it has grown more than 11 times, ETF Securities said.
Some of its companies have market capitalisations around US$100 billion, placing them on equal footing with the largest stocks on the ASX.
The Nifty50 was reported to be strongly up this year and has grown more than 9 per cent over the three months to the end of November.
The World Bank has forecast India’s economy will grow by 7.5 per cent in 2019-20 and by the same amount in the following year – ahead of China’s predicted growth.
“The economic reforms that have occurred in India over the past few years have been a catalyst for growth in the economy and equity markets,” Mr Walesby said.
He added that it makes sense for investors to pick up exposure to India, given that it is moving towards a consumption-based economy.
“If you believe that the India economy is going to grow in the next seven to eight years, then you want broad exposure,” Mr Walesby said.
Sarah Simpkins is a journalist at Momentum Media, reporting primarily on banking, financial services and wealth.
Prior to joining the team in 2018, Sarah worked in trade media and produced stories for a current affairs program on community radio.
You can contact her on [email protected].
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