High-yield ETFs reach record high

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Over the course of 2013, the ‘high-yield’ category of ASX exchange traded products (ETPs) reached around $500 million of net inflows, an all-time record level.

Yield-oriented Australian equities ETP exposures were one of the most popular investment categories in 2013, as low interest rates eroded investor returns on cash holdings, BetaShares managing director Alex Vynokur said.

“Investors are finding it increasingly difficult to rely upon traditional exposures to cash and bonds to deliver income streams. ETP flows suggest investors are seeking other asset classes in search of yield and returns.”

All of the ASX-quoted high yield products outperformed the broad domestic market on a cash and gross yield basis during the 2013 calendar year, according to analysis conducted by BetaShares.

Of the ETPs available on the ASX, ‘BetaShares Australian Top 20 Equity Yield Maximiser Fund’, trading under the ASX Code ‘YMAX’, recorded the highest yields of all ETPs available throughout the period. It had a 8.2% cash yield and 9.5%, when the benefits of franking credits are included (gross yield).

By comparison, the S&P/ASX 200 index recorded a cash yield of 4.2% and a gross yield of 5.6% at the end of the calendar year.

Six competing equity yield products were available for investors last year and the first new ETP of 2014 was also a yield based strategy.

“The number of competing products is a sign of maturity for the ETF industry in Australia. However, while products may appear similar, investors should be aware of the varying underlying investment strategies resulting in different performance and distribution outcomes,” Vynokur said.

“[We] feel the high-yield sector of the Australian ETP marketplace will continue to grow strongly throughout 2014.”
 

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