ETFs on bullish trajectory: BetaShares


By Daniel Paperny

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Appetite for exchange-traded funds (ETF) in Australia was on the rise with the industry surging to a total of $21.3 billion in funds under management last month, reflecting the growing maturity of the local ETF industry, according to BetaShares.

The group’s “Australian ETF Review” for March 2016 revealed the Australian ETF industry grew by 3 per cent, or $685 million, over the month.

New funds allocated to the industry accounted for 64 per cent of that growth, with the remaining $247 million derived from asset value appreciation.

The data builds on recent research conducted by BetaShares in conjunction with Investment Trends, which noted the number of ETF investors in Australia increased by 37 per cent in the 12 months to October 2015 – up to a total of 202,000 investors – in spite of global economic concerns “dampening” investor sentiment.

BetaShares head of marketing and strategy Ilan Israelstam noted that while ETFs were once regarded as a niche offering in the Australian market, self-managed superannuation funds (SMSF) had been early adopters and that, coupled with the recovery of global share markets, had helped build momentum for ETFs in Australia.

“ETFs are becoming much more mainstream for Australian investors … the benefits they provide can be seen in terms of cost, diversification, transparency and liquidity,” Israelstam said.

“The continued growth and evolution of ETFs will trickle down to the everyday Australian investors … particularly as we see them increasingly being adopted by non-SMSFs.”

He said the rising demand for Australian ETFs was a “natural evolution” and not an “alarming trend”, with some product rationalisation expected to occur as the industry matured and developed – such as the recent closure of 10 ETF Securities funds over the previous month.

“It’s hard not to be bullish about the prospect of this industry … particularly when we look at the next wave of investors,” he said.

“Our findings show a record number of people who say they will invest in ETFs and an extremely high number saying they will reinvest, and now we have more and more financial planners saying they will adopt ETFs as well.”

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