Invest
Aussies flock to fixed interest and ETP products for stable returns
Investors seeking stability during the COVID-19 pandemic have turned to fixed interest and cash exchange-traded products, new research has revealed.
Aussies flock to fixed interest and ETP products for stable returns
Investors seeking stability during the COVID-19 pandemic have turned to fixed interest and cash exchange-traded products, new research has revealed.
Stats collated by Rainmaker have shown that assets in fixed interest and cash exchange-traded products (ETP) grew by 30 per cent in the 12 months to September 2020.
“Fixed interest is in the spotlight as it is an asset class that has been growing for the past few years at the same rate as the overall ETP market,” said John Dyall, head of investment research at Rainmaker Information.
“Part of the reason is that term deposits interest rates are so low now that investors, retirees and their financial planners are desperately looking for alternatives that will satisfy their income and investment objectives.”
According to Rainmakers figures, fixed interest and cash products generated $2.9 billion in net flows in the 12 months to 30 September 2020.
“While this was down 25 per cent on the $3.9 billion of the previous 12 months, it is 130 per cent higher than the year ending September 2018,” Mr Dyall continued.
Fixed interest and cash products grew in funds under management (FUM) size by 38 per cent and 15 per cent, respectively.
In comparison, Rainmaker stated the Australian equities grew by 25 per cent, while international equities grew by 25 per cent.
“The peak net flow was at $5 billion a year in February 2020 before COVID-19 changed investors’ priorities.”
The figures showed that the number of fixed interest and cash ETPs increased by nine to 41, where four of the 41 products are cash or cash enhanced. These products make up 17 per cent of the ETP market.
“Of the 41 fixed interest ETPs, only two are labelled specifically as ESG, although it’s arguable that most government bonds and cash are ESG by default,” explained Mr Dyall.
Separate figures released by exchange-traded fund (ETF) provider Vanguard have also shown that Australians are looking for stable returns during the pandemic.
Vanguard Australia has recorded $5.7 billion in ETF inflows in 2020 (up 12 per cent from 2019), making it the best ever year on record, according to the latest figures released by the Australian Securities Exchange (ASX) and Vanguard.
The Australian ETF industry again reached a new high, surpassing $94.6 billion in AUM as at the end of 2020.
“Last year, we saw a wave of new retail investors enter the market for the first time. Along with the cost benefits and flexibility, ETFs allow for greater value transparency, providing investors with real-time pricing via the exchange,” said Minh Tieu, head of capital markets for Asia Pacific.
“We also continue to see greater participation year-on-year from institutional investors, with greater availability of ultra-low-cost ETFs likely bolstering demand.”
RELATED ARTICLES
About the author
About the author
Stock market
Portfolio reviews as an operating discipline: turning volatility into a competitive edge
In a higher-rate, higher-volatility world, portfolio reviews are no longer an annual hygiene task; they’re a core operating rhythm that protects cash flow, unlocks tax alpha, and sharpens risk ...Read more
Stock market
Fee war on the ASX: Global X’s A300 turns up the heat on core Aussie equity ETFs
Global X has lobbed a 0.04% management fee into Australia’s core equity sandbox, launching the Australia 300 ETF (A300) to take on entrenched giants. Read more
Stock market
Challenger IM shakes up the ASX with private credit note and a side of risk
Challenger Investment Management has taken private credit mainstream with an ASX-listed note structure—LiFTs—that secured roughly $100 million in cornerstone commitments within a day of launch. Read more
Stock market
International stocks: Diversifying your portfolio beyond Australia
In an increasingly globalized market, Australian investors have the opportunity to enhance their investment portfolio by incorporating international stocks. Diversifying your investments globally can ...Read more
Stock market
Stock market rally likely to continue regardless of Fed minutes tone, says deVere CEO
The bull run that has propelled Wall Street's major indexes to record highs this month is expected to continue regardless of the tone of the upcoming Federal Reserve minutes, according to Nigel Green, ...Read more
Stock market
US stock rally driven more by valuation growth than earnings, leaving tech names vulnerable: Innova
The strong gains in US stocks over the past year, particularly in the technology sector, have been driven more by expanding valuations than underlying earnings growth, leaving them exposed to a ...Read more
Stock market
Sun Silver to make its ASX debut with a $13 million IPO
Sun Silver Limited (proposed ASX Code: "SS1") has announced the opening of its Initial Public Offering (IPO) today, aiming to raise a minimum of $10 million and a maximum of $13 million (before costs)Read more
Stock market
Nasdaq hits record high, underscores the value of tech in investment portfolios
The Nasdaq Composite's surge to an all-time high last Friday highlights the importance of incorporating technology into investment strategies. Read more
Stock market
Portfolio reviews as an operating discipline: turning volatility into a competitive edge
In a higher-rate, higher-volatility world, portfolio reviews are no longer an annual hygiene task; they’re a core operating rhythm that protects cash flow, unlocks tax alpha, and sharpens risk ...Read more
Stock market
Fee war on the ASX: Global X’s A300 turns up the heat on core Aussie equity ETFs
Global X has lobbed a 0.04% management fee into Australia’s core equity sandbox, launching the Australia 300 ETF (A300) to take on entrenched giants. Read more
Stock market
Challenger IM shakes up the ASX with private credit note and a side of risk
Challenger Investment Management has taken private credit mainstream with an ASX-listed note structure—LiFTs—that secured roughly $100 million in cornerstone commitments within a day of launch. Read more
Stock market
International stocks: Diversifying your portfolio beyond Australia
In an increasingly globalized market, Australian investors have the opportunity to enhance their investment portfolio by incorporating international stocks. Diversifying your investments globally can ...Read more
Stock market
Stock market rally likely to continue regardless of Fed minutes tone, says deVere CEO
The bull run that has propelled Wall Street's major indexes to record highs this month is expected to continue regardless of the tone of the upcoming Federal Reserve minutes, according to Nigel Green, ...Read more
Stock market
US stock rally driven more by valuation growth than earnings, leaving tech names vulnerable: Innova
The strong gains in US stocks over the past year, particularly in the technology sector, have been driven more by expanding valuations than underlying earnings growth, leaving them exposed to a ...Read more
Stock market
Sun Silver to make its ASX debut with a $13 million IPO
Sun Silver Limited (proposed ASX Code: "SS1") has announced the opening of its Initial Public Offering (IPO) today, aiming to raise a minimum of $10 million and a maximum of $13 million (before costs)Read more
Stock market
Nasdaq hits record high, underscores the value of tech in investment portfolios
The Nasdaq Composite's surge to an all-time high last Friday highlights the importance of incorporating technology into investment strategies. Read more
