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Aussie ETF market stable as investors sit on the sidelines

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Australian ETF investors exhibited market caution in November after two strong months of growth. Outflows reached approximately AUD40 million this month while market capitalisation remained steady at AUD5.2 billion, according to the BetaShares Australian ETF Review for November.

While two new ETFs were launched in November to bring the total number of funds to 58,
trading values were significantly lower across the board indicating continued lack of conviction
by investors.

Of the five ETFs which had net redemptions, four were Australian equities-based indices with the S&P/ASX 200 ETF experiencing the largest outflow (approximately AUD40 million).

International equities continue to gain momentum suggesting investors perceive opportunity in international shares, primarily attributed to the strength of the Australian dollar.

New unit creations in the USD and GBP ETFs suggest investors are looking to profit from recent volatility by taking positions against the AUD.

The A$ currency-hedged gold ETF continues to remain popular among investors seeking refuge from volatility with approximately AUD4 million of inflows this month. This is in contrast to the non-currency hedged version which experienced outflows of AUD15.5 million.

“Volatility in markets spooked investors and caused them to reduce existing positions and
defer taking new ones. There were large withdrawals of money from Australian equity ETFs
and a significant fall in the average daily trading values for ETFs,” says Drew Corbet (pictured), Head of Investment Strategy, BetaShares.
 

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