ETFs chalk up record growth in 2013
The Australian exchange traded fund (ETF) market recorded its highest ever annual growth in 2013, with funds under management increasing by $3.5 billion according to the BetaShares Australian ETF Review.
The report states that over 2013, net inflows into ETFs increased 180 per cent on the previous year taking in approximately $2.4 billion of new money — by comparison retail managed funds experienced an 18 per cent increase in net inflows in the 12 months.
Despite December being a traditionally quiet month, the ETF industry achieved solid growth, with approximately $235 million of new money flowing into the market, said the report.
BetaShares managing director Alex Vynokur said international equities emerged as the key trend for the year, with approximately $1 billion flowing towards funds offering exposure to developed equities markets, particularly US equities where the top performing fund returned 66 percent.
"The US equities markets continued to test record highs while the Australian currency weakened against the US dollar, leading to strong performance of currency unhedged equity ETFs tracking US markets," Vynokur said.
The other prevalent theme for the year was the continued search for yield as $500 million of new money flowed into high yield products, he added.
"Despite the ASX rising sharply during 2013 and recording double-digit capital growth, investors continued to remain focussed on yield for their portfolios, a trend we expect to continue into 2014."
Commenting on the outlook for the ETF industry in 2014, Vynokur said he expected sustained industry growth as investors continued to adopt ETFs to use as portfolio construction and trading tools and remained bullish on domestic and international equities.
"We believe the industry is poised to maintain its fast momentum this year and expect to see total funds under management at $14 billion, with over 100 exchange traded funds on the ASX by the end of 2014," he said.
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