Australian ETP sector reaches another record high of $11.4 billion

The Australian exchange traded product (ETP) industry set another record high as total assets for the industry grew approximately 3% this month to $11.4 billion, an increase of $354 million, according to BetaShares Australian ETF Review for May 2014.

Importantly, almost 70% of the growth was attributable to new money flows, not asset price increases, suggesting new investors are continuing to add ETPs to their investment portfolios. May also represents the fourth consecutive month where new money inflows were greater than $200 million.

“The last four months inflows exceeded the total amount of new money raised by the industry during the 2012 calendar year. The increased level and consistency of inflows during recent months reinforces the notion that ETPs have become an increasingly mainstream vehicle to implement investment decisions,” said Alex Vynokur, Managing Director of BetaShares.

Despite investors continuing to adopt ETPs, the industry welcomed only its third new fund for 2014 with the first geared fund launched on the ASX during May. This compares with the last two calendar years where a total of 36 new products were launched.

“We have seen product growth momentum slow recently indicating a maturing market with all core asset classes now available on the ASX. However, we still believe there are product gaps to fill for Australian investors when compared with more developed international markets and believe this slower product growth is only temporary,” said Mr Vynokur.

May inflows were strong across a broad range of domestic equities products, high yield and the Cash ETF. Net outflows were limited this month and primarily involved selling out of emerging markets equities exposures which were also the best performing products in May.

“We are beginning to see a greater level of sophistication among investors using ETPs. This month saw profit taking in emerging markets ETPs after prices rallied during the month, which challenges a false perception that ETPs are “buy and hold” investments only,” he concluded.

Click the following link for a copy of the BetaShares Australian ETF Review_May 2014.