Australian ETF industry assets rose 15.2 per cent from $7.69 billion at June 30 to $8.85 billion at September 30, Morningstar found.
Morningstar research analyst Alex Prineas said increasing trading volumes and compressing bid/ask spreads make the ETF structure increasingly attractive.
“There’s a virtuous circle as increasing asset bases reduce costs, which in turn attracts more investors,” said Mr Prineas.
“The reverse is, however, the case for small or rapidly-declining funds,” he said.
The best performing Australian ETF in the third quarter of 2013 was Digga Australian Mining, which was up 19.08 per cent, followed by BetaShares Resources Sector ETF, which was up 18.73 per cent. The rising Australian share market accounted for around two-thirds of the increase for BetaShares.
Mining stocks performed well, with the slowdown in Chinese data abating, as did bulk commodities and iron prices rebounding above US$100 per tonne.
Specialised commodity products on the other hand were the worst performers in the September quarter with ETFS Corn declining 19.41 per cent and ETFS Natural Gas, ETFS Grains and ETFS Agriculture all falling by more than five per cent.
Mr Prineas said that overall, they had seen the escalating inflows to ETFs contribute to lower trading costs and rising trade volume.
