In their last review of Australian ETFs, they found that the sector had grown for the seventh consecutive month to have now $7.41 billion in assets under management.
BetaShares also point out the ETF market has become a lot broader with many more products now available.
“Some of the growth has been around a diversified product suite in the ETF market,” Alex Vynokur, managing director of BetaShares, told InvestorWeekly.
BetaShares believe the vehicle offers a very simplified option that can help investors get exposure to particular sectors.
“People want transparent products, people want cost-effective solutions, people want liquidity and all of these things are very much synonymous with ETFs,” Mr Vynokur said.
“The beauty about an ETF is you can achieve exposure to an asset class ... without necessarily having to make a call on specific stocks,” he added.
The influx of investment they believe is coming from two main sources, financial planners and the superannuation sector.
With the self-managed super sector, BetaShares see the changing legislative landscape as only stimulating interest.
“Some of the early indication we have seen and some of the early products that are being approved for MySuper make a fairly significant use of lower cost index options, which of course include ETFs,” Mr Vynokur reported.
Meanwhile, the interests from financial planners are also supported through the strengthening of financial oversight.
“We are now seeing financial planners changing their business models in light of FOFA [Future of Financial Advice reforms],” Mr Vynokur said.
He added, “Many are looking at ways to streamline their business model, where they can deliver a cost-effective scalable service to their clients ... often ETFs are now implemented as building blocks in their portfolios for clients.”
With the Aussie ETF still quite small relative to the developed economies in the northern hemisphere, BetaShares believes this is due to a lack of education about this vehicle.
“A real barrier, generally speaking, is people not understanding what ETFs do and what they don’t,” Mr Vynokur pointed out.
Despite this, the industry is expected to have $9 billion of funds under management by of the end of year.
