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On this episode of The nestegg Podcast, host Maja Garaca Djurdjevic and three experts discuss the latest in equities, property investing and super.

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Steve Waters, director of Right Property Group, chats about the latest in property, including the much-talked-about use of macro-prudential measures to cool the rapidly expanding market.

RMIT’s senior lecturer of finance, Dr Angel Zhong, talks about soaring ETFs, what they are and why young investors, in particular, are jumping onboard their latest surge. Dr Zhong also takes a closer look at BNPL platforms.

And lastly, tax and super guru Timothy Munro gives his thoughts on Prime Minister Scott Morrison’s choice to backtrack on any further SG changes and looks at the impending end of the low and middle income tax offset.

Have a question for our experts? Get in touch at [email protected] and you might get featured on the next episode.

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Learn the best strategies in investing and options like cryptocurrency, bonds, mutual funds, property and stock market." ["secure"]=> int(0) ["page_description"]=> string(7) "nestegg" ["page_rights"]=> NULL ["robots"]=> NULL ["page_heading"]=> string(71) "Invest Money - Strategies and Tools for your Investment Goals | nestegg" ["access-view"]=> bool(true) } ["initialized":protected]=> bool(true) ["separator"]=> string(1) "." } ["displayDate"]=> string(19) "2021-04-20 07:06:30" ["slug"]=> string(120) "16662:is-the-market-overheating-should-etfs-take-your-fancy-and-what-s-happening-to-the-low-and-middle-income-tax-offset" ["catslug"]=> string(11) "302:podcast" ["link"]=> string(133) "/resources/podcast/is-the-market-overheating-should-etfs-take-your-fancy-and-what-s-happening-to-the-low-and-middle-income-tax-offset" ["image"]=> string(58) "images/podcasts/Angel_Zhong_Steve_Waters_Timothy_Munro.jpg" ["image_alt"]=> string(0) "" } }

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Is ETF industry growth causing market distortions?

By Reporter

August 16 2017
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Invest

Is ETF industry growth causing market distortions?

By Reporter
August 16 2017

Australia’s ETF industry continues to grow rapidly but an active fund manager has suggested this growth may represent a new opportunity for active managers to outperform.

ETF, exchange-traded fund, active management, actively managed fund, investment strategy, passive investments, BetaShares, David Bassanese, David Pace, Greencape Capital

Is ETF industry growth causing market distortions?

By Reporter

August 16 2017
Share

Australia’s ETF industry continues to grow rapidly but an active fund manager has suggested this growth may represent a new opportunity for active managers to outperform.

July saw an additional $688.4 million invested in to Australia’s ETF sector, which according to ETF provider BetaShares, brings the volume of funds managed by the industry to a “record high” of $30.1 billion.

In its monthly ETF sector review for July, BetaShares noted that all of this growth came from new money being invested into these funds as the Australian share market remained flat over the same period of time.

“Hitting the $30 billion milestone is a significant achievement for the Australian ETF industry and an unequivocal sign of investors’ strong adoption and understanding of ETF products,” said Alex Vynokur, the company’s managing director.

“The size of the industry today also reflects the value that ETFs have delivered to investors in Australia, in terms of ease of access to all major asset classes, convenience and product transparency.”

However, the continued movement of money into passive investment strategies like ETFs could, according to David Pace, cause distortions in the market.

Mr Pace, a portfolio manager for investment firm Greencape Capital, said the increasing flow of money into such products “creates liquidity and pricing abnormalities” which in turn create opportunities for active managers.

“With the index already highly concentrated, passive funds continue to pour in, directing more capital into companies based on their position within the index, regardless of their underlying fundamentals,” he said.

“We see this as an inefficient allocation of capital that creates pricing abnormalities and provides significant investment opportunities for active managers. The opportunities for active stock pickers to capitalise on mispriced companies are greater than ever.”

Mr Pace nevertheless warned that “a willingness to deviate from the index does not alone result in success” and that active investors will need to conduct adequate analysis and to ensure they’re achieving suitable risk-adjusted returns.

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