The strong performance of global share markets in November attracted substantial investment into Australian exchange traded products (ETPs) pushing market capitalisation over AUD14 billion, according to ASX figures.
Exchange traded funds (ETFs) make up the majority of ETPs.
Over AUD450 million flowed into ETPs in November 2014, across domestic and international equity products, fixed income and cash, bringing total market capitalisation of Australia's ETPs industry to a record level of AUD14.2 billion in November 2014 – an increase of 21% from AUD11.76 billion since June 2014, according to monthly fund data supplied by the ASX.
Calendar year to 30 November 2014, ASX data showed AUD1.4 billion flowed into international ETPs compared to AUD894 million into domestic broad-based and sector ETPs, and AUD517 million into domestic strategy-based ETPs for the same period.
Arian Neiron, Managing Director, Market Vectors ETFs and Van Eck Global in Australia, says: “These numbers highlight the huge growth in global equity ETPs. Investors are attracted to the cost effectiveness, liquidity and transparency that ETFs provide. We expect this trend to continue into 2015 as investors increasingly employ ETFs to diversify and access new ideas and geographies for their portfolios."
According to Market Vectors, Australian equities underperformed their global counterparts with the S&P/ASX 200 returning -3.25% while the S&P 500 returned 5.76%.
November also saw the first month of trading of the unique Market Vectors MSCI World ex Australia Quality ETF (ASX code: QUAL), which tracks the MSCI World ex Australia Quality Index. That index returned 5.83% for the month of November.
"The innovative Market Vectors MSCI World ex Australia Quality ETF gives investors access to a portfolio of quality international companies which are included on the basis of three key fundamentals: high return on equity (ROE), stable year-on-year earnings growth, and low financial leverage,” says Neiron.
ASX data shows three new ETPs were listed on the ASX in November, taking the total number of ASX-listed ETPs to 101.
Neiron expects new ETPs, especially ETFs, to be listed on the ASX in the first half of 2015 and continued investment into growth assets, pushing up market capitalisation.
"We expect new ETPs to be launched on the on the ASX in the first half of next year, further broadening the investment choice for Australian investors. On the investing front, we expect investors to continue to leverage the strong growth in global equity markets, particularly the recovery in the U.S. and European economies.
"Self-managed superannuation funds will continue to be attracted by the low cost and transparent structure of ETPs and we expect to see the continued adoption of ETPs by financial advisers in 2015," he says.