In September, the ETF industry returned to growth with units outstanding increasing by 1.5 per cent representing $25 million of “new money”. This was in contrast to declines in the ETF total market cap which reduced by $270 million due to the downturn in bourses locally and globally.

Volatility continues to dampen overall trading volumes with investor conviction on market direction remaining low. However, the ETF market reveals how investors are staying exposed to markets:

• Interest in income/ dividends – Investors are looking at income as a source of returns with the three high dividend ETFs receiving strong inflows and trading volumes above average.
• Gold still a safe haven – Investors continue to flock to currency hedged gold as a store of wealth in uncertain times which continues its strong inflows from August.
• International and currency ETFs proving popular – Trading volumes across international ETFs increased by 10 – 15% and the US Dollar ETF received net creations of 5% suggesting investors are taking a view on the local fundamentals weakening.
• Investors perceive value in markets – While the market cap of the local ETF market dropped 5%, inflows of $25 million suggest some investors believe equity markets are undervalued.

“As the ETF industry continues to grow, the uncertainty and low market sentiment is skewing investors to products which will gain from a weakening in the Australian market. International shares, currency, hedged gold and dividends were favoured by investors during market volatility,” said Drew Corbett, Head of Investment Strategy of BetaShares.

“While still maturing, the suite of ETFs available for investors continues to expand allowing investors to benefit from a variety of market conditions,” he said.

The post ETF industry grows during market uncertainty appeared first on AdviserVoice.

Although the shrinking of net assets position of ETFs was small, the month of August was notable in that money has moved between different funds revealing insights on investor behaviour:

Lower fee proposition may be enticing investors – Vanguard’s lower cost broad market product (tracking the S&P/ASX 300) saw an increase of approximately $11 million in contrast to State Street’s broad market product (tracking the S&P/ASX 200) which experienced net redemptions of approximately $15 million. Indicates investors may be drawn to cheaper index/ beta exposures.

Demand for A$ hedged gold surges – Of the two gold exchange traded products, BetaShares’ QAU, which holds physical bullion but is A$ hedged gold saw strong inflows of approximately $10 million while ETF Securities’ unhedged gold product (GOLD) product experienced net redemption of approximately $25 million, suggesting investors continue to demand gold exposure, but prefer it to be A$ hedged.

Precious metals activity points to investor fear – There continues to be strong trading activity in silver and gold exchange traded products which indicates investors continue to seek refuge from volatility in the markets by investing in physical metals.

Currency ETFs take a hit – Net outflows in currency products indicate investors are currently reluctant to take a view on a weakening AUD.

“While we have seen a slight contraction and small redemption of units in the ETF market across August, structurally the market looks set to continue to grow strongly.  In addition, looking beyond total market flows we see interesting signs of money moving between competing products indicating greater maturity being introduced into the ETF landscape,” said Drew Corbett, Head of Investment Strategy of BetaShares.

“Another point to note for August was the extreme market volatility. During turbulent times, average daily turnover of ETFs increased proving the depth of liquidity available for investors,” he said.

The post ETF industry experiences net redemption in August appeared first on AdviserVoice.

Leading ETF provider BetaShares today announced the launch of a leveraged trading tool on the BetaShares Gold Bullion ETF (A$ Hedged).

The Macquarie QAU Mini Long (ASX Code: QAUKMA) allows investors to access leveraged exposure to gold without margin calls.  For a fraction of the outlay of buying the ETF outright, investors can now access pure gold bullion exposure that is unaffected by currency movements, leveraged at 65% at inception.

Drew Corbett, Head of Investment Strategy for BetaShares said that as US and European debt issues weigh on global risk appetite, investors are seeking refuge in gold as a safe haven asset.

“Through the newly listed MINI, investors are now able take a view on the performance of gold with reduced levels of capital and without the risk of margin calls” he said.

“Previously, investors looking for leveraged exposure to gold would need to use complicated investment products such as futures or CFDs. The new MINI allows investors seeking leveraged exposure to gold to do so through the ASX,” says Corbett.

As the MINI has been constructed over the BetaShares Gold Bullion ETF, the only A$ hedged ETF listed on ASX, investors are able to obtain gold exposure with a built-in currency hedge, substantially removing the effect of currency fluctuations on the performance of their investment.

“While spot gold prices surged 70% in the period December 2008 through end June 2011 unhedged spot gold returned only 12% for Australian investors. This is because a rise in the value of the Australian dollar eliminated much of the benefit of the rising value of gold (which is priced in US dollars),” Corbett concluded.

The Macquarie  MINI Long represents the third MINI listed over BetaShares’ ETFs after similar products were listed on the BetaShares Resources Sector ETF (QREKOA) and BetaShares Financials Sector ETF (QFNKOA).

The post Launch of first gold bullion MINI on ASX appeared first on AdviserVoice.