Change in the investment market towards ETF investments
Inflows into exchange-traded securities continue to build within the market environment, as investors begin to diversify their holdings into international and fixed-interest products. Many Australian investors are now switching towards using exchange-traded funds (ETF); with the ETF market having net capital inflows in October of $600 million.
If all pans out for ETF product issuers the total inflow of funds into Australian-listed ETF’s for the calendar year (2016) should be around the vicinity of $5 billion and may even end up being more. This should result in total funds under management across all ETF markets to be beyond $24 billion. This just goes to show that this type of investment product is widely accelerating in popularity and is an attraction for investors looking outside the norm of conventional investment products.
Recently there has been an increase in ETF’s for retail investors which is undisputed and rapidly growing month on month as the number of products available also increases in Australia. With the bulk of the money from investors being invested into ETF equity products with coverage of the ASX200 Australian index and S&P500 US index to name two of the major market players in this space.
There is a large amount of funds being directed into fixed-interest ETF’s of late. This is largely due to investor philosophies’ and market outlooks changing to now include capital protection within their mindsets. Equity markets continue to remain expensive and as this continues to be the case for the short-term investors are looking now more towards chasing higher yields in bond ETF’s. This will continue to grow in popularity and size as we begin to see interest rates rise both in the US and other parts of the world. This offers a clear indication that investors are recognising the benefits of products that offer higher real returns and with greater flexibility compared to that of standard bank income products such as term deposits.
If you would like to discuss alternative investment options for your portfolio, whether it be part of a Self Managed Super Fund (SMSF), personal portfolio or a new investment, call Total Advice Partners today and speak with one of our financial advisers.
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