Exchange traded fund (ETF) inflows accelerated in 2008 as their appeal of increased diversification, liquidity and lower fees attracted investors from traditional managed funds.
American investors pumped nearly $200 billion into ETFs in the first 11 months of 2008 and pulled $193 billion out of managed equity managed funds, according to the Investment Company Institute of Washington.
The ETF growth story is poised to continue and the sector’s assets under management will soar to $1.5 trillion in 2009 from the present $1.06 trillion, according to Barclays Global Investors (BGI).
“ETFs are in demand for their liquidity and transparency, making them the preferred investment vehicle for managing risk,” BGI iShares Australia co-head Adam Seccombe said.
“Demand here in Australia has risen noticeably in the past 12 months as familiarity has increased and we are confident ETF trading will continue to increase consistently with trends worldwide.
“We are seeing a growing segment of advisors and investors who have embraced the appeal of ETFs and are using them as building blocks in their clients’ investment portfolios.”
Average daily trading volume of ETFs soared 32.5 per cent to $120.6 billion a day in 2008, according to BGI’s latest ETF Industry Preview.
BGI’s iShares Australia unit has 16 ETFs which charge fees from as low as 0.09 per cent to a high of 0.74 per cent, according to the iShares website.
State Street Global Advisors offers three ETFs locally as well.
ETFs are index funds that trade like ordinary shares on a stock exchange.
