ETF industry up by 20%

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The Australian Exchange Traded Fund (ETF) industry has continued its positive trajectory with market capitalisation growing 20%, an addition of $1.25 billion in funds in the first half of 2013, according to BetaShares’ Australian ETF Review for the Half Year 2013. As at the end of June, total industry funds under management reached a fresh record high of $7.63 billion.

Inflows into Exchange Traded Funds for the half year were $970 million, already eclipsing the total net inflows for 2012 of $850 million.

This fast growth was generated despite only one new product being launched in this period, resulting in a total of 80 exchange traded products on the ASX.

The top product categories for inflows in the period were international equities with approximately $500 million of inflows, followed by income equity strategies attracting approximately $300 million.

Commenting on the rapid growth of the industry, Alex Vynokur, managing director of BetaShares said, “The local ETF industry continued its rapid rise, mirroring the fast growth we are experiencing around the world.”

Gold exchange traded products saw the largest outflows this year to date as investors have been reducing their gold investments in light of the price declines over the last six months.

“The ETF industry is fast becoming a barometer for investor sentiment towards asset classes, including gold which was part of a major global sell off earlier in the year. At the same time, currency ETFs continued to trade heavily after the RBA’s interest rate cuts in May saw the Australian dollar plummet almost 10 per cent against the greenback and other major currencies,” he said.

“The Australian ETF industry continues to mature and experienced the first ETF closures on the ASX this last month with Market Vectors Australia removing all 6 of their existing products from quotation. Overall, however, we are beginning to see real traction with investors and advisers who are utilising the key benefits of ETFs, being low cost, transparency and liquidity. Based on this, we predict increased new product activity during the second half of the year and for the market to end at some $9 billion in assets under management by the end of the year,” said Vynokur.

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