Unlike their Australian counterparts, Global ETF investors continue to pour money into fixed income, with the category receiving over US$40bn in flows for the year, bringing the global ETF industry to over $2.5 trillion in AUM as at the end of May.
“Global ETF investors are utilising fixed income investments for a variety of reasons including income, duration and importantly, to reduce overall portfolio volatility,” commented Amanda Skelly. “This has included broad based bonds for diversification benefits, corporate and EM bonds for income and government bonds for duration.”
This differs to the preferences of most local ETF investors, where interest in bonds is still in its infancy.
“Australian based investors are starting to recognise the benefits bonds offer outside of just income, but continued investor education is vital to seeing demand increase,” said Skelly.
Australian ETF growth continues to outpace the global ETF landscape, with AUM growing by 11 per cent compared to 4 per cent globally for the year to 31 May.
“Self-directed investor and advisor interest in developed international equities and Australian equities continue to drive this growth,” confirmed Skelly. “Australian equity based-ETFs saw the largest inflows all year, indicating positive market sentiment despite expectations of softer domestic growth for the remainder of the year.”
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