ETF growth continues
The number of investors in exchange-traded funds (ETFs) continues to grow strongly, according to the latest BetaShares/Investment Trends ETF Report released this week.
With 79,000 investors expected in the sector by the end of 2013, building on estimates of 69,500 investors at the end of 2012, the report stated that if the midpoint of the forecasts were achieved, a 13 per cent increase would result in 2013.
Commenting in more detail, Alex Vynokur, managing director at BetaShares, said that of the estimated 69,500 ETF investors, 47 per cent or 33,000 were purchasing through self-managed super funds (SMSFs), highlighting that superannuation remains a key investor type for the growth of ETFs.
"The ETF industry continued to grow strongly during 2012 in difficult market conditions, and we believe continued growth will occur this year as investors continue to embrace ETFs as a way to obtain low-cost, transparent exposures and as building blocks for portfolio construction," he said.
"ETFs have become more commonplace among Australian investors and we expect this trend to continue, with the industry setting record highs each month during the six months to end March 2013 in terms of funds under management."
Vynokur also said that contrary to popular belief, the rise of the ETF industry had not come at the expense of traditional managed funds, with only 13 per cent of those surveyed reducing their allocation to managed funds in order to invest in ETFs.
"Currently, the Australian ETF industry is, in the main, bringing more investor capital into the market, rather than providing a substitute away from other investment products, including managed funds," he explained.
Indeed for Vynokur, it was not surprising that survey results pointed to a high repeat investment rate in ETFs, with approximately 70 per cent of existing ETF investors considering adding to their existing ETF investments in the coming 12 months.
"ETFs are access vehicles for investors and it is not surprising to see this rating highly along with the other commonly cited benefits of ETFs such as diversification, low cost and liquidity," he said.
"(And) while the Australian suite of products remains underdeveloped compared to the US, Europe and Canada, we expect the industry to continue maturing.
"And, based on the historical growth rate, (we) predict assets under management to reach $9 billion by the end of the year and $13 billion by the end of 2014."
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