ETF use continues to rise despite market volatility
The number of exchange-traded funds (ETFs) used by investors is on the rise despite continued market volatility, according to the BetaShares/Investment Trends ETF Report released in May.
According to the report, there were 60,500 ETF investors at the end of 2011, an increase of 13 per cent from the prior year; however between 63,000 and 70,000 investors are expected by the end of 2012.
Drew Corbett, head of investment strategy at BetaShares, said that while the BetaShares/Investment Trends report suggested that multiple benefits were apparent to respondents, it also showed how diversification and low cost continued to be the main drivers for ETF investment.
"It's not surprising investors are finding multiple reasons to use ETFs, ranging from accessing investments and liquidity as well as the core benefits of diversification and low cost," he said.
"A lower returns outlook due to market volatility explains investor behaviour in seeking refuge in cash and term deposits; however, despite this, ETF investors or those considering the product continue to increase."
And though a lack of familiarity was cited as a key barrier to investing in ETFs, Corbett indicated that investor comfort was growing and would grow further as a result of continued education.
"Many of the barriers stopping people from using ETFs are solvable through education by product issuers and advisers," he said.
"Familiarity, transparency and knowing the underlying assets of the fund is about ETF providers engaging directly with investors to explain the structures of the product.
"While our market is less mature than the US, Europe and Canada, a majority of the major assets classes are now available on the ASX (Australian Securities Exchange)," Corbett added.
"We are beginning to see trading volumes return, and an increase in market confidence should lead to strong growth."
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