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Appetite for equities boosts ETP market

Samantha Hodge  |  09 Nov 2012Text size  Decrease  Increase  |  

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Samantha Hodge is a journalist with InvestorDaily, a Sterling publication.


The Australian exchange-traded product (ETP) market reached a record high for October following increased demand for international and domestic equities.

According to the BetaShares Australian ETF (exchange-traded fund) Review for October, the ETP market reached $6.1 billion in assets under management (AUM) after a month's growth of $360 million.

The best ETFs by performance for the month were the China and listed property ETFs. Eight of the top 10 ETFs by creation were equities-based, with the cash ETF and currency-hedged bullion ETF rounding out the list.

"The flow of money for the month suggests renewed investor appetite into both international and domestic equities," BetaShares head of investment strategy Drew Corbett said.

"While yield has been the flavour for the ETP market this year, we are starting to see investors slowly flowing back to more growth-based products," he said.

New unit growth was 6.3 per cent for the month with trading volumes increasing by almost 60 per cent in October, indicating greater investor confidence.

But BetaShares noted that industry growth can also be attributed to continued inflows to the Cash ETF and Currency Hedged ETF.

Another increasing trend for the month is an increase in the number large institutional trades, BetaShares found in its report.

"As the market for ETPs develops, we are increasingly seeing institutions use ETFs for core allocations as well as tactical tilts and transitions. This is a welcome sign and is indicative of a maturing ETP industry," Corbett said.

"In general, it was encouraging to see increased investor activity for Australian Securities Exchange-listed ETP products. While this is partly a reflection of markets rallying, it is also exciting to see investors having greater familiarity with ETPs and using them to express positions in their portfolio," he said.