Exchange-traded funds (ETF) are driving the shift in investor movement towards using the Australian Securities Exchange (ASX) as their primary vehicle for investments.
According to a former iShares Australia co-head, the evolution has already begun, spurred on by activity around the new fixed income products set to enter the market.
"More Australians will begin to do their investing via the ASX," ETF Consulting principal Tim Bradbury told InvestorDaily.
A theme occurring in the United States was that investors wanted to buy on the exchange, Bradbury said.
"On last count, there were 62 ETFs and I forecast that there's going to be closer to 100 by the end of the year," he said.
The ASX has begun to make that possible here, namely the AQUA rules approval for fixed income structures to trade.
"There's valid reason for the ETF market to grow in Australia and part of what will help that is more products," Bradbury said.
"Choice has always been a big driver of ETFs.
"The ability to transact easily via the ASX is going to appeal to a lot of the market and this is going to be an evolution," he said.
BetaShares listed its Australian High Interest Cash ETF last Wednesday under the ASX code AAA.
"It comes back to investor demand as fixed income was an area where ETFs can continue to deliver low-cost, diversified exposure," BetaShares head of investment strategy Drew Corbett said.
He said advisers need to be aware that it offers cash 'at call' through the ETF, a high interest rate, pays monthly distributions and no exposure to fluctuations in bonds to achieve yield.
The ASX has confirmed it will list six fixed income ETFs this week from Russell Investments and BlackRock.
"This is the emergence of a new asset class of ETFs so only time will tell to see what sort of variations come beyond the vanilla," ASX listed investments business development manager Jonathan Morgan said.
Russell Investments will be listing its ETFs on 13 March and will include its Australian Government Bond ETF (ASX code RGB), Australian Semi-Government Bond ETF (ASX code RSM) and Australian Select Corporate Bond ETF (ASX code RCB).
BlackRock's ETF launch date is unconfirmed while State Street Global Advisers are also set to launch fixed income ETFs shortly.
