Despite the market turmoil, the Australian exchange traded funds (ETF) industry continued to show investors’ confidence in Q2 in this asset class, with the number of transactions, volume and value figures reaching all-time highs, ETF Securities’ Q2 ETF Landscape Report found.
“According to recent data from the Australian Stock Exchange, pre-COVID-19 crisis ETF trades accounted for approximately 4% of total trades on the ASX but during the COVID-19 pandemic, this ballooned to about 10% of total trades,” the firm’s chief executive, Kris Walesby, said.
According to him, this reflected the appeal of diversification and versatility that ETFs offered to investors as well as an access to a variety of asset classes at a relatively low cost which could be used as the building blocks of multi-asset portfolios.
“The early stages of the COVID-19 pandemic saw a flight to safety in ETFs, via precious metals like gold or broad-based market ETFs,” he added.
Also, investors were looking at recovery with Australian equity and property ETFs particularly benefitting and, at the same time, there was an increase in shorter-term trading activity, such as cash, commodities and geared funds.
During the COVID-19 pandemic, three new ETFs entered the market, bringing the number of total ETFs currently available on the ASX to 207. The new funds had managed to attract capital inflows of over $60 million to date.
“This trend gives us confidence that Australian investors will continue to seek new opportunities in the ETF market to capture attractive buying opportunities,” Walesby concluded.
“We believe the ETF sector will continue to perform strongly– despite pressure from extreme market circumstances.”