Released yesterday, the BetaShares ETF Review for January reveals a drop in the growth of assets under management to $9.8 billion, which is wholly attributable to negative market movements, BetaShares managing director Alex Vynokur said, noting that despite the fall, the industry received positive new money inflows for the month of approximately $150 million.
“Despite the drop in overall funds under management this month, units on issue grew by 1.2 per cent, suggesting investor appetite remains buoyant despite recent volatility in the markets,” Mr Vynokur said.
“Products providing commodities exposure were the strongest performing products for the month as the domestic and international bourses across the world took a breather,” he said.
“Despite equity markets being volatile, ETFs provide investors access to other asset classes such as commodities and currencies to develop a diversified portfolio with the potential to outperform across a variety of market conditions,” he said.
Instreet managing director George Lucas said the drop most likely reflects the quiet market in January, rather than a structural change.
“The first thing that comes to mind is obviously the market came down three per cent and the market went down a little bit more overseas. That would have affected the size of the market, both the Australian and overseas listed ETFs,” Mr Lucas said.
“The second thing is that January is a very quiet time, so there was very little inflow into anything during January in Australia. With the market going down, it didn’t match with the inflows coming in,” he said.
“I don’t think it is anything to worry about; the ETFs haven’t lost their appeal or anything, I think it is just a January effect and a market effect.”
The BetaShares ETF Review shows two thirds of the month’s inflows (approximately $100 million) were into Australian equity exposures, with a majority of the remaining money going into European equities exposure.
Net outflows for January were small, with a majority coming from unhedged gold, with investors taking the opportunity to exit as the price of gold increased approximately seven per cent for the month, according to the report.
“Competing products in a single sector signal a maturing industry, which is beginning to mimic the more developed ETF markets in Europe and the United States,” Mr Vynokur said
Europe and Japan are the top picks for overseas equities in 2014, according to Instreet’s Mr Lucas.
“Europe is one of our favourites and I think there will be growing demand for the Japanese market as well,” he said.
“We think [Japan] will still be the best developed market performer this year on the back of earnings growth and the reforms the government is doing, some of which actually seem to be taking hold.”
Mr Lucas anticipates the Japanese yen may lose five to 10 per cent this year against the Australian dollar.
