BetaShares Australian ETF Review February 2014

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Industry surges to another record high

Alex Vynokur

Alex Vynokur

The Australian exchange traded fund (ETF) market recommenced its growth path in February, reaching a new record high of $10.3 billion in funds under management, according to the BetaShares Australian ETF Review.

Industry market capitalisation grew by 5% over the month, and around $235 million of new money flowed into exchange traded funds. Another positive trend this month was increasing trading activity – with trading value growing 10% over the previous month.

Over half of total inflows (approximately $160m) went into Australian equity exposures with a majority of the remaining money going to international equities, particularly European markets. Interestingly however, not all the inflows this month were bullish – the BetaShares Australian Equities Bear Hedge Fund (ASX code ‘BEAR’) also entered the top five funds by inflows for the first time in several months, indicating investor caution around continued growth in local equities markets.

“Despite overall positive inflows to domestic equities this month, we saw a significant upswing in the number of investors protecting downside risk in their portfolios or taking a position to profit from a downturn in the Australian market using the Bear Fund,” according to Alex Vynokur, Managing Director of BetaShares.

One of the benefits of ETFs is that they allow investors to easily obtain lower cost, liquid and transparent exposure to a broad range of asset classes. For example, the best performing products for February were those offering commodities exposures including agriculture, silver and gold. Returning from market lows, currency hedged gold also rallied this month as geopolitical risk caused uncertainty in global markets.

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