The local exchange-traded fund (ETF) market has seen an increase in flows to international ETFs, with both developed and emerging assets seeing an uptick in investor interest, according to a new report released by State Street Global Advisors (SSgA).
The SSgA Mid-Year Outlook for 2013 found this was a key difference for the local market, relative to the global.
The Australian ETF sector had seen dramatic growth during 2013, with total assets under management as of 31 May close to $7.7 billion.
This is up $1.2 billion – or 20 per cent – from the end of 2012.
SSgA head of SPDR ETFs in Australia, Amanda Skelly, said the group’s global growth forecasts are supportive for the continued positive performance of risky assets, though at a less robust pace than in the first half of 2013.
“In this environment, we anticipate that investors will continue to prefer equity ETFs over bond ETFs. Within equities, we expect that investors will continue to look to international equity ETFs as a way to tap into offshore investment opportunities,” Skelly said.
Flow data indicates investors remain hungry for yield and favour broad market equity funds but are wary of commodities and certain emerging market investments.
Skelly added that while investors continue to search for yield, that yield should be sustainable.
The report found that, over the remainder of the year, increased investor uncertainty in the local market as a whole may see flows to broad-based Australian equity ETFs increase at the expense of stock or sector-specific plays.
The ETF sector recently celebrated its 20th anniversary, with SSgA noting the Australian market’s unique growth driver was the continued adoption of ETFs by the self-managed super fund area.
