The Australian exchange traded fund (ETF) industry reported a record high of $7.1 billion, with five per cent growth in funds under management (FUM) for February 2013, according to BetaShares’ February Australian ETF Review.
February is now the fifth successive month in which the ETF industry has achieved record highs. The month saw 5.2 per cent market capitalisation growth and new inflows of approximately $137 million.
The best exchange traded products for February were the financial sector ETFs, followed by high dividend ETFs.
There is a continued yield focus among investors. This category of products attracted approximately $31 million of new money in February.
The growth of the Australian ETF market in the first two months of the year parallels the continuing growth of the global ETF industry.
“The key trend in the current cycle is that the lowering of interest rates is driving the search for equity income,” Drew Corbett, head of investment strategy at BetaShares, told InvestorWeekly.
“High dividend paying equities are being sought and we’re seeing a lot of cash going into them. As people are taking on more equity risk, they are taking advantage of the high Australian dollar to invest in international shares as well through ETFs,” Mr Corbett said.
ETF providers have now given investors a broader menu of products to take advantage of, whereas two years ago Australian investors didn’t have access to high-yield equity ETFs, he said.
However now that people are getting more comfortable with ETFs and using them more, there are a lot more funds flowing into these strategies – particularly from retail investors.
“ETFs allow retail investors the same sort of access to international portfolios that institutions already enjoy,” Mr Corbett said.
“Investors who are advised by financial planners are diversifying their investments into equity income strategies domestically, and diversifying portfolios into higher allocation of international equities, as global risk appetite seems to be on the rise.”
