Exchange Traded Fund (ETF) investors are starting to shy away from Australian equities, with $40 billion flowing out of funds offering the asset class in the last month, according to a BetaShares report.
In a record month for the local ETF market, which saw funds under management reach a new high of $10.5 billion, investment patterns started to change, with most of the growth from new money rather than from existing assets.
Around $200 million in new money came in during the month, contributing to industry market capitalisation growth of 2 per cent, the ETF review showed.
Despite the shift away from Australian equities, broad-based equities remained in favour with investors, BetaShares managing director Alex Vynokur said.
“With investors potentially feeling unsure about the future direction of the local equities market, many are taking the opportunity to construct a more defensive portfolio incorporating cash and yield-focused strategies to guard against potential market volatility,” he said.
“The best-performing exposure each month this year to date has been commodities-based and highlights the value of the asset class in building a diversified portfolio, especially during times of equity market volatility.”