Invest
Investors seek ETFs during COVID-19 pandemic
Despite COVID-19 seeing some markets fall by over 30 per cent, the ETF market has flourished, growing to over $56 billion, new research has found.
Investors seek ETFs during COVID-19 pandemic
Despite COVID-19 seeing some markets fall by over 30 per cent, the ETF market has flourished, growing to over $56 billion, new research has found.
A report by Stockspot has revealed that the ETF market size has tripled since 2016 and has become the preferred way to access diversified investments on the ASX, having overtaken listed investment companies (LICs).
Chris Brycki, co-author of the report and CEO of Stockspot, said: “ETFs will continue to be the success story of the wealth industry as investors look to add better diversification at a low cost into their portfolios.”
The report found that ETF investors prefer ESG, with social investing becoming the major winner (73 per cent growth) due to increasing awareness after the bushfires and COVID-19.
While traditional safe havens such as precious metals ETFs, including palladium (+90 per cent) and gold (+43 per cent), are providing investors with the greatest returns.
Contrary to this, oil and energy ETFs (-65 per cent ) were the worst performers. Many of the years’ other worst performers like property (-32 per cent) had come from being top performers in recent years.
While being bullish on the sector as a whole, Mr Brycki warned investors of the importance of picking the right ETFs for their investment needs.
“It’s important investors understand that not all ETFs are created equal,” he said.
“There are some we would never touch or recommend to clients, including leveraged ETFs, active ETFs and complex synthetic ETFs that aren’t backed by the underlying assets.”
“These ETFs are high risk, and we see no need for them in client portfolios. Long-term results show you will perform better by avoiding them.”
Instead, the fund manager advocated for building a well-diversified portfolio over time.
“We encourage investors to use ETFs as part of a diversified portfolio for long-term investing only, and not for short-term speculation or trading. The recent collapse of the oil ETF, as well as ASIC’s May 6 trade warning to retail investors, should serve as a reminder that trading in and out of ETFs, or any other investment for that matter, is a poor strategy.
“Investing in a well-diversified portfolio of low-cost index ETFs continues to be the best way to build long-term wealth,” Mr Brycki concluded.
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
