Further ETF growth tipped for new year
Last year’s record growth in the Australian exchange-traded fund (ETF) industry is not expected to dampen the appeal of the investment vehicle in 2014, Morningstar believes.
Instead, the research body has adopted the mantra “success can further breed success”, with ETFs touted to grow well beyond the $10 billion milestone.
In the three months to 31 December, 2013, ETF assets grew from $8.85 billion to $9.93 billion - a jump of 12 per cent for the quarter and 54 per cent for the year, according to Morningstar’s quarterly ETFInvestor newsletter.
Nine new products launched during the quarter, bringing the total number of ETF vehicles to 91.
Commenting on the trends, Morningstar research analyst Alex Prineas said the strong momentum is not expected to taper soon.
“Success can breed further success - continuing assets growth leads to increasing scale, greater liquidity, lower trading costs and the opportunity for lower management fees, which increases ETFs’ attractiveness even further,” he said.
The spike in US natural gas prices late last year saw ETFS Natural Gas (AU) CSP ETPGAS become the best performing Australian ETF in the December quarter, up 15.72 per cent, while the worst performing ETFs were commodity or mining-related, according to the report.
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Platinum Asset Management has announced it is in discussions with a global alternatives fund manager regarding a possible merger to create an $18 billion firm.
Frontier Advisors has bolstered its Japanese footprint through a partnership with the $350 billion asset management arm of Nippon Life Insurance Company.
JP Morgan Asset Management has appointed an ETF specialist from Vanguard as it seeks to expand its ETF range.
