AIIM expands its ETFs coverage

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More Australian investors are turning to exchange-traded funds, and so are we.

Australia’s exchange-traded funds market is booming, with total assets set to exceed $30 billion in 2017. We have set up a specialist team to focus on the ETFs market to help guide investors through the complex – and expanding – ETFs universe.

Key beneficiaries: General investors. Category: Exchange-Traded Funds.

We’re moving to expand our ETFs coverage to bring you even more news and analysis on a regular basis, on what is arguably one of the most exciting and dynamic areas of the ASX.

It’s been fascinating to watch as the ETFs product market has gone from a virtual standing start a decade ago to now, where 200 separate products are listed on the Australian Securities Exchange holding around $30 billion in assets.

In addition to analysing different ETFs and the various investment strategies employed by product fund managers, we’ll also be keep an ongoing watch on ETF market trends as well as changing investor behaviours in relation to capital flows into and out of funds that are exposed to specific asset classes.

ETFs growth is mushrooming

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Australian investors are set to channel record amounts of capital into exchange-traded funds this year, taking the total value of investments in locally-listed ETF products above $30 billion for the first time.

Indeed, if the 2016 year is anything to go by, inflows into ETF products will continue to surge.

In a single market trade, investors can buy one ETF security that covers a whole index such as the S&P/ASX 200, the US’s S&P 500, the UK’s FTSE, and hundreds of others. Much further than that, there are ETFs on the Australian market that hold parcels of stocks in companies and securities providing exposure to specific sectors such as property and infrastructure, and to asset classes such as fixed interest and cash.

The Australian ETFs market broke new ground during 2016, with strong investor demand driving a 22 per cent increase in invested funds to $25.7bn. A total of 40 new ETFs were launched during the year, bringing the total number of fund products on the market at year-end to 196.

Just a few weeks into 2017 and several new ETF products have already been listed, taking the full tally to 200. Expect to see further growth this year in the number of ETFs investing into fixed interest securities such as bonds.

Research by ANZ’s ETFs unit shows that Australian equities-focused ETFs continue to dominate the products marketplace, with this segment recording growth of 31 per cent last year as investors focused on a mix of different strategies to diversify their portfolios. The largest inflows continue to be into broad-based Australian equity funds.

The majority of ETFs on the market are considered passive in that rather than using fund managers to try and outperform a particular index, they instead buy all the stocks in the index and weight their holdings according to the companies’ market capitalisations.

These products are designed to replicate specific investment strategies, investing into multiple ETFs that, for example, aim to deliver high growth, growth, income or balanced returns.

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