The December SSgA snapshot indicated the Australian ETF market had a similar experience, with assets under management increasing by 52 per cent.
Amanda Skelly, SSgA’s head of SPDR ETFs, Australia, said SSgA anticipates another strong year, with the Australian ETF industry expected to reach $13 billion in assets under management by the end of the year.
SSgA believes this will mainly be driven by investors searching for cost-effective, simple and relevant investment solutions.
“At SSgA, we expect global growth to gather momentum in 2014, with recovery being more broad-based” said Ms Skelly. “With this backdrop, there are plenty of ETF investment opportunities to catch the Australian ETF investor’s eye.”
Ms Skelly believes equity-based ETFs; ETFs offering exposure to Europe and the United States; globally-diversified, dividend-based equity ETF strategies; and actively-managed emerging market ETFs are the four main opportunities for 2014.
In terms of equity-based ETFs, investors should choose ETFs with exposure to cyclical sectors rather than defensives, she said.
“Although valuations are no longer as deeply discounted as this time last year, equity markets remain attractive relative to fixed income and other alternatives,” she said.
SSgA expects that the USA will experience accelerated growth and that Europe’s recovery, while fragile, positions the region for modest growth.
Ms Skelly said some market participants are wary that dividend investing is approaching a bubble, as investors add exposure to boost their income needs.
“We caution investors to avoid painting dividend-based equities with too broad of a brush as they may miss opportunities with companies that have been steadily growing their dividends over long-time periods,” she said.
The landscape of emerging market ETFs has changed and consequently emerging markets may not present the same opportunity.
“A discriminating approach, in terms of geography, assets, sector and investment style may deliver the best return potential in inefficient markets,” Ms Skelly said.
