ETFs funds and products steam ahead

Exchange traded funds (ETFS) have continued their unbroken growth trajectory recording 16 months of growth with an increase in funds under management of $900 million for the month of May, leading to a record funds under management (FUM) of $18.6 billion.

The continued growth was spurred on by the launch of 20 new products from two providers and solid market growth of underlying investments with accounted for 60 per cent of the increase in FUM. The remaining 40 per cent came from new inflows of funds, mainly into broad Australian equities and developed international equities products.

New exchange traded products (ETP) launched into the Australian market have also hit a record level with 29 products released since the start of the year. Of those 20 were released in May alone, 17 of them following the launch of the Australian Corporate Bond Company — which will issue single Australian corporate bond ETPs, and one each from BetaShares, Market Vectors and UBS. ANZ has flagged that it will also launch six new ETPs in the coming weeks.

The new product launches are more than double the total number for 2014 in which only 12 ETPs were released to the market with the total number of ETPs currently available on the ASX standing at 129.

BetaShares managing director, Alex Vynokur, said the increase in product reflected strong investor demand as well as greater opportunities in the market for ETP providers and the ETF market was on track to exceed expected growth levels by year end.

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"With a multitude of new products launched and a lot more expected in the latter half of the year, we believe the market may exceed our initial expectation of $23 billion in FUM by the end of 2015," Vynokur said.