Exchange-traded funds (ETFs) trading values were down in August as investors largely sat out on trading activity, according to BetaShares' ETF review.
Market volatility saw investors' risk appetite crumble as trading values dropped 21 per cent for the month. It was a stark turnaround from July, when interest in Australian equities drove a 4 per cent increase in market cap growth.
A slide in iron ore prices and fault lines in the traditionally robust resources sector were the culprits, according to BetaShares head of investment strategy Drew Corbett.
But a swell in underlying asset prices still drove 1.9 per cent growth in the ETF market, which reached a record peak of $5.5 billion in assets under management in August.
And international equities and USD ETFs – which received significant inflows – were still popular with investors who were positive on overseas markets and US currency, BetaShares said.
"The fund flows to international ETFs indicates investors believe it may be an opportune time to purchase overseas equities due to local currency strength and buying across the S&P 500 and global 100 ETFs," Corbett said.
Yield strategies still retained some appeal for investors over the month through high dividend and cash products, according to BetaShares.
Investors continued to favour commodities to diversify away from traditional equities strategies, Corbett said, and they were the best performing ETFs for the month, with oil and non-precious metals constituting the top five for returns.
"Agriculture is up 30 per cent in the last three months, while August saw rallies in non-gold precious metals and oils," he said.
