Institutional investors have shown advisers how it’s done, and now advisers are changing their tactics.
Since the Australian cash rates dropped to 2.75% advisers have increased their demand for ETFs, driving traffic up 250% on the BetaShares currency ETF website. Betashares managing director Alex Vynokur says advisers are their clients are looking at ways to profit from or protect against a weakening Australian dollar.
“We are beginning to see advisers follow the lead of institutional investors in adopting strategies such as transition management and sector tilting, complimenting the more traditional passive investment strategies,” Vynokur said.
A number of Australian advisers have been pairing back international equities positions in light of recent equity market volatility, but wanting to preserve their US Dollar currency exposure through a US Dollar ETF, whilst they wait for equity market volatility to settle down.
The currency ETFs are designed to go up when the local dollar weakens against its paired currency. Since 8 May, the average daily trading value for the Currency ETF suite has more than doubled compared to average daily values since the products’ inception.
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