Alex Vynokur

Australian exchange traded fund investors are favouring defensive cash and yield-oriented funds, with approximately $135 million flowing into these products in April, according to the monthly BetaShares Australian ETF Review.

Another record month saw the Australian exchange traded product (ETP) market break through the $11 billion barrier in funds under management at the end of April. The market grew by 4.3% in the month, and has now grown approximately 50% over the last 12 months. Total monthly market growth amounted to $452 million with approximately $300 million of growth coming from new money inflows.

Highlighting investor appetite for yield, Australian high yield equities products were the most popular product category by inflows during April, while the top individual product for net inflows was the Cash ETF.

“Exchange traded products in Australia are increasingly becoming mainstream, with assets under management expanding rapidly. Growth is being driven by an increase in confidence around global markets as well as familiarity by investors with exchange traded funds. Growth continues to be strongest in domestic and international equities, high yield and cash oriented products,” Mr Vynokur said.

Net outflows were virtually non-existent in April, with small outflows recorded in gold exposures.

“ETPs make it easy for investors to access a range of targeted exposures, and to implement portfolios strategies consistent with their views on the market. April’s outflows were minimal suggesting a bullish sentiment towards exposures across most asset classes,” said Mr Vynokur.

In terms of performance, two of the top five products for the month were commodities based while A-REITs also rallied.

“Commodities-based exposures have consistently been amongst the best performing asset class each month this year to date, despite trading activity in these funds being low. This suggests investors are missing out on potential opportunities available from the commodities asset class,” he concluded.

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