The Australian exchange traded fund (ETF) industry has bucked previous trends to see an increase in funds under management (FUM) in 2012, according to Plan for Life data.
Plan for Life’s ETF analysis for the December quarter found that FUM for the sector grew to $6.519 billion, with the number of separate ETF products on the market expanded to 85.
“The ETF sector in Australia is quite new but we’ve seen significant growth particularly over, say, the last six months,” Plan for Life senior market and research analyst Stephen Ryan-Gledhill told InvestorDaily.
“If you look at generally the investment environment over 2012, we saw quite a lot of money early in the year sitting in fixed income and cash management trusts, with people nervous about what the markets were likely to be doing.
“Now we’re seeing a move back across the board into the equity markets.”
State Street Global Advisers (SSgA) was the leading ETF provider, with $2.803 billion or 43.0 per cent of the market.
Following State Street was iShares, with $1.605 billion or 24.6 per cent of market share, then ETF Securities with $707 million or 10.8 per cent.
“I think people are generally interested in what the ETF wrapper gives them – that low cost, transparent, simple way to trade – but there has been a lot of hesitancy where the markets are,” SSgA Australian head of SPDR ETFs Amanda Skelly said.
State Street’s SPDR S&P/ASX200 fund was the leading product in terms of FUM, with 32.2 per cent of market share and an annual growth in the 2012 calendar year of 7 per cent.
Ms Skelly said that the current momentum in the ETF industry is project to continue throughout the rest of the year.
“We have projected good growth for the ETF category in line with what the ten year growth rate has been, which is around 26 per cent,” Ms Skelly said.
“So we’re at about $7.2 billion at the moment and we’re expecting that the year is going to close out over $8 billion for the ETF industry.”
Mr Ryan-Gledhill said the growth of self-managed super funds (SMSFs) was likely to positively impact the ETF sector.
“I think the growth of the ETF and the increase in the number of SMSF accounts are running parallel, but the two trends are converging,” Mr Ryan-Gledhill said.
“With interest income not keeping up with the amount that [trustees] need to fund their retirement, they need to take a little bit more risk and ETFs are much easier to manage.”
