The Australian exchange-traded fund market has grown to $48 billion, showing the country’s demand for passive investing.
An ETF is effectively a basket of different securities, meaning there is potential for broad market exposure through one single purchase.
According to research conducted by BetaShares Australia, which is an ETF provider, in April the industry fund under management grew $1.9 billion, up 4 per cent. This is the second-highest growth on record for the industry, only being eclipsed by the 2.3 billion achieved in February this year.
BetaShares chief executive Alex Vynokur believes the industry will soon reach $50 billion in funds.
“It is exciting to see the industry continue its growth trajectory, having doubled in size in just 2.5 years as it approaches the $50 billion milestone,” Mr Vynokur said.
One of the most notable trends, according to BetaShare, is the strong investor demand for Australian fixed income and cash ETF, which were the largest categories for next inflows this month. This shows that investors are beginning to think more defensively in their portfolios.
“Growth in the fixed income category is one of the most notable trends so far this year, reflecting a more defensive positioning from investors. One of the key benefits of ETFs is the ease with which investors and their advisers can make such asset class adjustments to their portfolios. Consequently, we’ve seen the fixed income and cash ETF categories grow particularly rapidly since the beginning of the year,” Mr Vynokur said.
The growth in ETFs has seen 243 exchanges currently being traded on the ASX. This is only a marginal gain of last quarter with two new products being launched, a global REIT product from Van Eck and an Active Global Multi Factor ETF from Vanguard.
However, it is not all good news for an investor, with the trading value decreasing by 17 per cent for the month of April.