Strong growth for ETFs as stockmarkets recover

Investors poured more than $1 billion into exchange traded funds (ETFs) in April as the stockmarket rebounded after March’s crash, according to BetaShares.

The ETF industry rose by $4.1 billion, or 7.2%, during the month to reach a total of $61.3 billion thanks to inflows into Australian equities, commodities and cash.

Some 74% of the monthly growth was due to asset value increases, the remainder was $1.1 billion of net new money.

Ilan Israelstam, co-founder of BetaShares ETFs said: “This growth represents the second largest absolute growth in dollar terms on record and the fastest monthly growth rate for almost five years.

“Notably however, the rise was still not enough for the industry to regain its peak value, which was $66 billion, set in January. Industry growth over the last 12 months has been 28%, with absolute growth of $13.3 billion over the period.”

Australian equities saw the first inflows at $575 million followed by commodities at $264 million. Defensive funds providing short exposure or exposure to cash were also popular with $234 million and $109 million respectively while international equities saw inflows of $99 million. Outflows were seen from Australian and global bonds, Europe and emerging market equities and Australian small caps.

Israelstam said: “Significant inflows also went into funds providing short exposure, with BetaShares’ bear funds receiving over $200m in inflows, as well as being amongst the most heavily traded funds for the month. These inflows into short funds, alongside robust flows into cash ETFs, indicate that many investors remain bearish and potentially of the view that the April rally may be short-lived.”