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Australian ETF market just shy of AUD9bn AUM

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The Australian exchange-traded fund market hit a fresh record high of AUD8.9bn in assets under management, as market capitalisation grew by AUD138m during September, according to BetaShares.

While the firm’s Australian ETF Review for September confirms the pace of growth was slower than previous months, September marks the 16th consecutive month of positive growth for the industry.

There was a strong US-theme this month with US equities and US Dollar currency exposures being amongst the most popular in terms of net inflows. Investors continued to seek out cash however, with inflows into the Australian High Interest Cash ETF being the second highest category for net inflows.

Alex Vynokur, managing director of BetaShares says: “ETF inflows suggest investor appetite has not dampened for US exposures despite concerns around the US debt ceiling, with investors adding both US equities and the US Dollar currency to their portfolios.”

Despite the bullish sentiment towards international equities, investors continue to favour cash. In addition, in a more distinct sign of negative sentiment, the BEAR fund, designed to go up when the market goes down and vice versa, entered the top 10 funds by net inflows this month for the first time in 2013.

“The exchange-traded product flows for September shows that not all investors are willing to take on risk assets. While on the one hand money is still flowing into international equities, there is also another part of the market that is looking for the capital stability of cash or even taking a view that the market is potentially due for a correction and using the BEAR fund to hedge portfolios or to profit from a market decline,” says Vynokur.

The best performing products for the month were global equities and Asian country ETFs.

“It was not surprising to see Asian equities ETFs rebound in September with many emerging markets performing poorly in August as investors moved capital back to developed economies such as the US.

“The power of ETFs lies in their ability to provide access for investors to take a view across multiple asset classes and strategies. As the industry continues to mature, ETF flow information is increasingly becoming relevant as a gauge for investor sentiment,” Vynokur says.

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