Yield still the flavour for Australian ETF investors
The Australian ETF industry was up slightly last month with growth of approximately one per cent in terms of units outstanding and net new assets of AUD13m, primarily from continued inflows into cash and dividend products, according to BetaShares’ Australian ETF Review for June.
Market cap remained steady at AUD5.2bn with the most popular products for the month being the High Interest Cash ETF which attracted just over AUD7m in funds along with high dividend ETFs which combined attracted approximately AUD13m over June.
“We are continuing to see the yield play being popular with investors as they seek shelter from market volatility. However, June also presented some missed opportunities for ETF investors,” says Drew Corbett, head of investment strategy at BetaShares.
The top performers for the month were the agriculture (14 per cent) and financial sector equities ETFs (4.8 per cent) although returns were again not indicative of asset flows.
“While agriculture and financials were the top performers, flows into these funds were subdued. This also occurred in May when bond ETFs were the best performing but received very little new money. While there are opportunities in a volatile market, investors are still playing defensive, sticking with familiar asset classes,” says Corbett.
Defensive trades also included redemptions in the Xinhua China 25 ETF which experienced the largest outflow of all ETFs this month of almost AUD5m, most likely triggered by the negative news coming out of China including the slowing of manufacturing.
“We are beginning to see ETFs as a gauge for investor sentiment of various asset classes – in June we saw investors fall out of favour with China, expressing this view by selling the China ETF, and in May we saw the USD ETF turnover tripled due to the weakening of the local currency,” says Corbett.
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