ETF investors rush into fixed income in Q1 2019

Global exchange trade funds (ETFs) investors saw their portfolios tilted towards fixed income at the expense of equities in the first quarter of 2019, according to BetaShares’ Quarterly Global ETF Review Q1 2019.

BetaShares’ chief executive, Alex Vynokur said that the flow into defensive fixed income ETFs during the March quarter reflected a carryover of investor concern which followed heightened equity market volatility in the December quarter.

“This trend is not confined to the US, with the European ETF market seeing record net inflows into fixed income ETPs of more than ~€14 billion,” he said.

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Also, the Australian market mirrored the trend and the fixed income received strong support from local investors with over A$500 million of net inflows in the period, according to the report.

The report said the global ETF industry ended Q1 at a high record of US$4.4 trillion in assets under management (AUM), which translated into a 12 per cent growth quarter-on-quarter and was expected to continue to increase in line with the average growth rate of 20 per cent per annum.

One of the reasons for that was the simplicity to access of ETFs which attracted different types of investors, including institutional asset allocators, financial advisers, high net worth individuals and millennials.

“Invetsors are continuing to view the ETF structure as an evolved one comparted to traditional managed funds, a trend we believe is likely to continue,” Vynokur, said.

He stressed that although the Australian ETF industry had not yet achieved such a clear divergence in flows, it was definitely outgrowing their additional managed fund counterparts.

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