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Global equity ETF inflows return in July

After seeing funds under management fall in June, Australian listed global equity ETFs saw strong inflows last month.

Global equity was the most traded asset class in ETFs listed on the ASX in July, experiencing funds flow of $411 million.

The latest managed fund statistics, released by the ASX, show that global equity ETFs have experienced a sharp turnaround after seeing FUM fall by $8.2 million in June.

There was just over $1 billion traded in global equity ETFs on the ASX in July, followed by Australian equity ($857 million) and Australian fixed income ($702 million).

The high levels of trading in fixed income is likely related to the BetaShares Australian High Interest Cash ETF, which was the highest traded ETF in July.

Commenting on the trends, ETF Securities Australia head Kris Walesby said the rise in global equities inflows was "not a surprise" and is "likely to continue".

"Fixed income ETFs, one of the biggest growth sectors in Australia and across the world, are likely to become slowly less popular," Mr Walesby said.

"This is because, as investors anticipate a rate hiking cycle, they are likely to postpone allocations beyond what is completely necessary because the bonds will reduce in value (although yields will rise) until the ascending cycle completes.

"It’s clear that the cycle up will be slow, but the RBA has signalled a 3 per cent 'plus' base rate target, which will have many investors pausing or considering term deposits and cash ETFs as a more attractive option."

Mr Walesby said global equity ETFs remain investors' "go to" solution for international exposure.



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Murrough O’Brien

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