The exchange-traded fund (ETF) sector has regained its pre-COVID-19 performance beating its previous all-time end-of-month high by $1.2 billion in July, a recent industry report has revealed.
According to the “BetaShares Australian ETF Review – July 2020”, the ETF industry has returned to performance levels last seen before the onslaught of the COVID-19 pandemic.
“In a mirror image of global stock markets, the Australian ETF industry has regained its previous peak some six months since market volatility began in earnest back in February,” BetaShares said.
“The Australian ETF industry closed the month of July at $67.2 billion, an all-time end of month high, eclipsing the previous record from January of $66 billion.”
In addition, funds under management grew by 2 per cent or $1.3 billion in July, with 26 per cent growth over the past year representing absolute growth of $13.8 billion during this period.
“With global share markets flat during the month, essentially all of the industry growth this month derived from net new money (as opposed to market movements), which totalled $1.2 billion,” the fund manager noted.
“Trading value remained relatively high in July, albeit dropping back on recent record months. Total value was down [approximately] 20 per cent, with a total of $6.6 billion traded on the Australian Securities Exchange (ASX).”
Australian bonds and gold received the highest amount of net flows at a sub-category level, while Australian equities had net outflows of $192 million, a considerable change compared to the start of the year when Australian equities received the highest amount of net flows.
“To the extent money went into equities, this was particularly in the technology sector,” BetaShares added.
“Best performance this month came from precious metals, particularly gold and silver, along with gold miners. Given the accompanying rise in the Australian dollar, performance in these exposures was best in currency hedged form.
“It was also notable that we saw two ethical ETFs in the top 10 products for flows this month, with BetaShares Global Sustainability Leaders ETF and BetaShares Australian Sustainability Leaders ETF receiving [approximately] $140 million in flows between them.”
In May, an ETF Securities report on the sector revealed ETFs were performing at “all-time highs” despite the market turmoil caused by the COVID-19 pandemic.
In March, a panel of industry stakeholders said advisers could minimise their compliance risk through the use of ETFs instead of picking individual stocks for clients wanting to invest directly on the ASX.
