The Australian exchange traded fund (ETF) market continues to grow, with the sector reaching a record high in March.
According to new research from BetaShares, the domestic ETF market hit the milestone figure of $7.12 billion in assets under management, on the back of positive market conditions.
While February saw international equities positioned as the preferred ETF, March saw investor interest swing back towards domestic equities.
"It's mostly sentiment-driven," BetaShares' managing director Alex Vynokur told InvestorDaily.
"From what we're hearing, from certainly the first few months of the year, investors are allocating more towards international ETFs, but the focus has shifted onto the domestic market - basically because people believe that the Australian market is offering better prospects."
The March results represent the sixth consecutive month in which the ETF sector has achieved record asset levels.
Despite high first quarter inflows across ETFs as a result of equity-based products, the results show that cash ETFs were the most popular with new inflows during March.
Mr Vynokur said risk aversion is still a major factor in the market and is having an impact on product choice.
"There is a shift towards income-based strategies, so we've seen the highest allocation - or the product that has actually grown the most - is the high interest cash ETF," he said.
"People are still looking to put money into the high interest cash solutions and in terms of other components of the yield or income strategies there has been a mix of high-dividend equity ETFs and the yield maximiser fund.
"So, despite the fact that investors are allocating into equities there is still a little bit of caution out there."
