ETFs uptake surges as investors hedge against uncertainty: State Street
Australian investors are increasingly turning to exchange traded funds (ETFs) to tap into the benefits of offshore investments, with the sector surpassing $15 billion in funds under management.
State Street Global Advisors head of SPDR ETFs, Amanda Skelly, said the industry hit the milestone after a record-breaking December, when $672 million followed into the category.
She said the continued growth of the ETF industry represented 50 per cent year-on-year growth, largely driven by interest in international-based ETF, came as "no surprise" despite fears about the stability of the Eurozone, and forecast further growth in 2015.
"Local investors will continue to seek opportunities that tap into the diversification benefits of investing offshore this year and Tuesday's fall in the ASX 200 put a spotlight on the current volatility in the local market," Skelly said.
"Materials and energy make up a large percentage of our market and with lower commodity prices and the possibility that disappointing growth in China will negatively impact our exports, the reaction comes as no surprise - and investors are therefore seeking opportunities overseas."
Skelly added that ETFs could provide investors with an opportunity to manage their currency risk.
AUTHOR
Nicholas O'Donoghue
Recommended for you
Australian fund managers are actively seeking to launch Cayman versions of their funds to attract offshore flows, with Regal Partners set to launch its latest offering this month.
As private markets gain traction in Australia but only a limited pool of talent is available, three recruiters explore whether fund managers should consider looking overseas to find top talent.
With an explosion of private credit managers appearing in the market, two alternatives experts believe a consolidation is needed to maintain the quality of the sector.
Bentham Asset Management has become the latest fund manager to expand its distribution team as it reports increased interest in its credit strategies.
