Aussies shifting to ETPs: Morningstar

Exchange traded products (ETPs) are the dominant investment vehicle for Australians, Morningstar reports.

The research house's 2015 Global Asset Flows Report, found that net assets in ETPs in 2015 grew from $14.8 billion to $21 billion, equivalent to an increase of 41.5 per cent, eclipsing the combined 2.9 per cent growth of Australian managed funds.

"Australia's ETP market was the beacon for inflows in 2015, amassing more than $5.7 billion," the report said. "Equities were the main beneficiary with inflows of more than $4.9 billion, with Australian equities collecting $2.2 billion.

"The fixed-income category secured $457.4 million."

The report found that combined net assets across the broad category groups almost doubled since 2007, reaching $902.7 billion as at the end of December 2015.

"The driver behind the asset growth has been the allocation category with an increase of $291.7 billion during the period of investigation," Morningstar said.

"In comparison, in the same period, world ex-Australia equities collected $69.0 billion, fixed income gathered $38.5 billion, and the asset base of Australian equities expanded by $18.7 billion."

The report warned that divergent monetary policies being pursued by the leading central banks, falling commodities prices combined with weak corporate growth, were likely subdue global returns going forward.

"Overall, the world economic landscape is not looking too rosy, with more than a few reasons for concern weighing on investors' minds," Morningstar said.

"Opinions are divided as to whether the US is heading into a recession (which would also significantly impact the rest of the world), or whether a few strong economic indicators are enough to maintain slow but steady growth.

"In this turbulent environment, investors are searching for higher (or just positive) returns, while trying at the same time to keep their portfolios diversified and to manage risk."


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