Self-directed investors embrace ETFs during COVID-19

From

Kanish Chugh

Self-directed investors are increasingly aware and educated about their investments, if ETF trading activity during COVID-19 is any indication, says Kanish Chugh, Head of Distribution at ETF Securities.

Presenting the the latest edition of the ETF Securities Australian ETF Landscape Q4, Chugh adds “In just over three years, the Australian ETF market has doubled its funds under management to over $73bn[1].

“Increasingly popular with investors looking for cost-efficient and easy access to the market, ETF usage has traditionally been dominated by financial intermediaries, such as advisers, planners and brokers. This year saw a shift with a huge jump in self-directed usage as investors sought to take control of their portfolios and seek out new opportunities.

“Global technology has been the big focus of the year, with investments in the ‘FAANGs’ or the tech sector funds being popular with both buy-and-hold investors and short-term traders.

“Leveraged exchange traded products have jumped in popularity as investors looked to benefit from opportunities presented by more volatile markets this year. Safe-haven assets have also been popular, with gold-backed ETFs a notably strong performer across the year.

“While trading volumes for ETFs may have settled from March peaks, usage of ETFs is anticipated to continue to grow as is the range of investment options available in Australia. The popularity of new trading platforms with an ETF bent, such as Superhero or Pearler, further aids the take-up of ETFs,” adds Chugh.

The report further highlights:

  • Concerns over the COVID-19 pandemic saw average daily trading value peak to more than double to $772,705, 196 in March 2020[1]. Values have since normalised but funds under management and available listings for ETFs in Australia continue to grow in reflection of the continued interest in these products.
  • The Australian ETF market is currently valued at over $73bn in funds under management across 216 listed products as at 31 October 2020.
  • 17 new listings since the last ETF landscape report, including ETFS Ultra Short/Ultra Long Nasdaq-100 Hedge Funds (ASX codes: SNAS/LNAS).
  • 11 ETF funds were delisted.

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[1] https://www2.asx.com.au/content/dam/asx/issuers/asx-investment-products-reports/2017/pdf/asx-investment-products-october-2017.pdf

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