SMSFundamentals | Jan 15 2014
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By Greg Peel
Investors small and large embraced exchange-traded funds (ETF) like never before in Australia in 2013 as local and global stock markets rallied, fixed income stalled and term deposit rates fell to unattractive levels. The Australian-listed ETF market posted its strongest ever year of growth (55%), adding $3.5bn to a record $10bn by year’s end. New funds flow represented $2.4bn, up 180% on 2012 net flows.
Industry data for retail managed funds is only available up to end-September for comparison, but to that date they had seen only 18% growth in net funds flow.
The three major sponsors of Australian ETFs – iShares, Vanguard and BetaShares – accounted for 97% of total flows. International equities emerged as the most popular choice for the year, attracting $1bn of flow into developed market offerings. US equity ETFs were the best performers of 2013, with the top fund returning 66%. US ETF returns benefited from the rally on Wall Street coinciding with a drop in the Aussie dollar. Small and mid-cap US funds led the charge.
Yield remained the Holy Grail in Australia, with a further $500m flowing into local high-yield ETFs and a further $200m into the Australian High Interest Cash ETF.
“We saw investors and advisers continue to adopt ETFs as portfolio construction and trading tools as they become increasingly mainstream,” noted Alex Vynokur, managing director of BetaShares. “We believe the industry is poised to maintain its momentum this year, and expect to see total funds under management at $14 billion with over 100 exchange traded funds on the ASX by the end of 2014.”
For a table of all Australian-listed ETFs, including stock, fixed income, commodity and currency offerings, click here.
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