The Australian exchange-traded fund (ETF) market has reached a record high of $38.4 billion in funds under management (FUM), growing by $534 million last month, according to BetaShares.
The ETF provider’s “Australian ETF Review May 2018” revealed 90 per cent of the growth came from new money inflows, which was a significant contrast to the April figures where the majority of growth came from asset appreciation.
Over half of May’s new money inflows came through international equities, which continued to be the largest category for inflows at $273 million, more than double that of April, the report said.
This was followed by cash and fixed income, receiving $110 million and $64 million, respectively.
Commenting on the month’s activity, BetaShares chief executive Alex Vynokur said: “It’s a positive sign to see another strong month for industry growth and especially positive to see FUM at an all-time high.
“Similar to April, investors are still wary of how their assets are allocated, despite an improvement in the markets.
“Investor sentiment towards Australian equities remains mixed, illustrated by strong inflows into cash and fixed income products.”
Vynokur said product innovation in the Australian ETF industry continues to deliver a broad range of investment options for investors and has opened up markets investors ordinarily would not be able to invest in.
“As investors experience market volatility, they now have the ability to really get the most from their portfolios,” he said.
“ETFs allow investors to take advantage of a simple way to allocate their assets and ensure they have a diversified portfolio.”
The number of available ETFs to Australian investors is 234, following the addition in May of an income-oriented active ETF and the BetaShares Australia 200 ETF.
Earlier this month, Stockspot chief executive and founder Chris Brycki said SMSFs are using ETFs to address diversification issues in their investment portfolios, which continue to be overweight in Australian shares.
Brycki added SMSFs are broadly overweight in cash relative to fixed interest and also hold a considerable amount of property in their portfolios.
