ETF sector kicks off 2012 with strong inflows
The Australian exchange-traded fund (ETF) market saw net inflows of $31 million in January, after experiencing net redemptions in December, according to BetaShares.
The market cap of the sector also increased by 5 per cent to $5.1 billion, according the BetaShares Australian ETF Review for January 2012.
BetaShares head of investment strategy Drew Corbett said investors are switching to broader market and property ETFs in search of lower management fees.
"The money switching between lower cost beta exposures was also experienced in August 2011, where investors became fee conscious amidst global economic uncertainty," said Corbett.
Gold ETFs accounted for $22 million of the inflows in January, which reflected the anxiety of investors about the global economy.
"Investors are positioning portfolios for downside risk through gold and US dollar exposures in the event of further bad news which might derail an economic recovery," said Corbett.
Investors are also directing money towards high-dividend ETFs, with iShare's High Dividend ETF receiving $2.7 million in new money and the Russell ETFs RDV and RVL attracting $4 million in new money.
However, Corbett pointed out that the bank sector ETF, QFN, had actually performed better than the more popular high-dividend products.
Given that fixed income ETFs have been given the green light by the regulator, the sector as a whole is set to perform well in 2012, he added.
"Even with uncertainty surrounding global markets, the ETF industry continued to see consistent inflows from investors. If global markets recover in 2012, we believe the industry will restart its growth trajectory after hovering around the $5 billion mark for much of 2011," Corbett said.
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