The Australian exchange traded funds (ETF) sector has recorded strong growth for the past three years, almost doubling in size since 2011 and nearly reaching $10 billion in assets under management (AUM).
Currently the ETF sector has 90 funds with $9.4 billion in AUM, up from $6.5 billion in 2012 and from $4.9 billion and 50 funds in 2011.
This growth has been fuelled by adviser and self-managed superannuation fund demand as well as the search for dividend yield, according to SPDR ETFs Australia head Amanda Skelly.
“Year-to-date growth in the Australian ETF market has surpassed 40 per cent, fuelled by financial adviser and continued SMSF investor adoption and their preference for on-exchange access to market opportunities,” Skelly said.
“High yield investing has been a favourite for Australian investors for quite some time and we are now seeing a rapid increase in interest from global investors, with AUM to high yield equity ETFs surpassing $100 billion this month.”
The growth in the Australian ETF sector follows a slow September with October posting near record inflows of more than $270 million, according to Australian Stock Exchange data.
Local market returns were 4 per cent for October, with ETF investors preferring domestic investment strategies which focused on high yield. However some ETF investments have gone to Europe as a result of central bank policies, indicating future growth. The S&P Europe 350 Index delivered 3 per cent for the month and S&P 500 returned 3.3 per cent.
According to SPDR the gap between equities and commodities continued to grow, with local and overseas investors becoming net sellers of commodity-based ETFs. Australian ETF investors also looked to benefit from currency-based ETFs after the Australian dollar reached US$0.97 in mid-October.
