ETF investments set to soar further


By Kristen Crawford

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Exchange-traded fund (ETF) market data has projected there will be 184,000 investors in the space by November, new industry research has shown.

The fifth “BetaShares/Investment Trends ETF Report” released last week showed the ETF market had skyrocketed by 46 per cent to 146,000 investors in the 12 months to October, exceeding expectations, Investment Trends senior analyst Recep Peker said.

“Based on data we had collected, we estimated by the end of 2014 that we’d have only 128,000 investors, but the actual number has far exceeded that,” Peker said.

The report also said a record number of investors planned to make their first ETF investment in the next 12 months, while 40 per cent of advisers were now using ETFs in their practices.

Further, around 80 per cent of current ETF investors were considering reinvesting in ETFs over the next 12 months, BetaShares managing director Alex Vynokur said.

“It’s pleasing to see that many investors are discovering the diverse benefits that ETFs provide in terms of cost, transparency and access,” Vynokur said.

Mirroring the growth in usage by individual investors, adviser use of ETFs also grew from 33 per cent to 40 per cent, he said.

However, while 43,000 new ETF investors joined the market in 2013, the proportion of investors who said their adviser played a role in that investment was steady at 27 per cent, the same as last year.

That highlighted significant opportunities for advisers’ involvement in recommending ETF investments, Vynokur said.

Meanwhile, he explained how the ETF market in Australia had evolved.

“We’re now seeing many more advisers skilled and competent in the use of ETFs, and one thing we’re noticing is how advisers’ usage of ETFs has significantly evolved from the early-stage strategies,” he said.

“Examples of advisers more strategically using ETFs at the moment include a few themes, one of which is interest in European equities off the back of the quantitative easing, [another is] Japanese equities, which people are accessing using ETFs.

“Based on the historic growth rate, we predict assets under management to be in the range of $21 billion to $23 billion by the end of 2015.”

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