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Australian ETF market hits all-time highs
13 May 2013
Equities still in favour, slowdown in gold outfloows
The Australian exchange traded fund (ETF) industry is going from strength to strength, reaching a record high of A$7.4bn ($4.8bn) at the end of April, according to BetaShares.
In contrast to the previous month's trend, the increase is primarily down to growth in asset prices rather than any structural growth boosted by the creation of new units, according to BetaShares. Market capitalisation growth was roughly A$300m even though actual new money into the industry was only around A$85m.
Equities continue to attract demand, with new investor money flowing into both domestic and international equity products in April. Net inflows reflect the seemingly continuous investor desire for equity yield with A$40m of the A$85m new money flowing into equity income/yield strategies.
A$18m of new money flowed into iShares IOO (S&P Global 100), A$14m into IVV (S&P 500) and A$12m into IAA (S&P Asia 50). While domestically, there were A$10m of new creations in each of IOZ (Australia 200 ETF) and IHD (High Dividend ETF) and ILC (S&P/ASX20).
Vanguard had A$5m net creations in each of VTS (US Total Market), VEU (All World Ex-US) and VAP (Australia Listed Property Trust ETF).
Russell only saw a A$250k growth, which is not keeping pace with the growth of alternative high-yield/high dividend Australian ETF offerings, while BetaShares had A$5.5m of net creations in YMAX (Equity Yield Maximiser Fund).
UBS had A$1m of net creations in ETF (Research Preferred Australian Shares ETF, a 13% increase in units outstanding.
Investor conviction seems to be waning, given the 25% decrease on month-on-month trading value. Outflows from gold ETF products continued but this was at a reduced rate compared to the previous month.
Of the 85 products trading on the Australian stock exchange, the best performing instruments in April included the iShares MSCI Japan, up by 9.2%, Financial Sector ETFs-X-A-REITS, up by 8.4-8.6% and Listed Property Sector ETFs that rose by 8-8.1%. Also rising by more than 7% were ETFS Natural Gas and iShares S&P Global Telecommunications.