The Australian exchange-traded fund (ETF) industry has ended the 2012 year on a high, continuing its steep growth trajectory to finish at a record $6.4 billion in funds under management, according to the latest BetaShares Australian Exchange Traded Fund Review.
Citing inflows that were up 60 per cent on those seen in 2011, Drew Corbett, head of investment strategy for BetaShares, pointed to fixed income ETFs as the investment to watch in 2013.
"While fixed income ETFs launched in 2012 on the ASX, they have not yet gained the same attention compared with overseas markets," he said.
"The fund which captured the largest amount of money in Australia was the Cash ETF, followed by various high yield equity products, which exemplifies the continued investor demand for yield within more familiar asset classes."
And while yield was the theme for 2012, at least with respect to fund inflows, Corbett said that the top-performing products for the year had been Australian property sector ETFs and financial sector ETFs.
"While the overall Australian stock market was up 20 per cent, certain sector ETFs performed significantly better," he said.
"In fact, the top five performing ETFs for the year were sector ETFs, highlighting the potential for investors to generate investment alpha through sector tilting."
Looking to the year ahead, Corbett said that the industry would remain competitive.
"If financial markets remain buoyant, we could see the Australian exchange-traded funds market with $9 billion in assets under management at the end of 2013 and $12 billion by 2014."
