ETFs ‘ballooned’ to 10th of ASX trades
Investors have flocked to ETFs, according to a new white paper, despite the virus-induced market turmoil.
The latest ETF sector report from provider ETF Securities has stated that the number of transactions, volume and value figures reached a record high.
Kris Walesby, chief executive of ETF Securities, commented that the early stages of COVID-19 saw a “flight to safety in ETFs, via precious metals like gold or broad-based market ETFs”.
“According to recent data from the ASX, pre-COVID-19 crisis ETF trades accounted for approximately 4 per cent of total trades on the ASX, but during the COVID-19 pandemic, this ballooned to about 10 per cent of total trades,” Mr Walesby said.
“This may be a reflection of the appeal of diversification and versatility that ETFs can offer to investors. They realise that they can access a variety of asset classes at a relatively low cost and can be used as the building blocks of multi-asset portfolios.”
He added more recent trading suggests investors are looking towards the recovery, with Australian equity and property ETFs benefiting.
“We also note an increase in shorter-term trading activity, such as cash, commodities and geared funds,” Mr Walesby said.
Three ETFs entered the market during the pandemic: ETF Securities offering ETFS FANG+ ETF, BetaShares S&P/ASX Australian Technology ETF and VanEck Emerging Income Opportunities Active ETF.
The new funds were reported to have seen capital inflows of more than $60 million to date.
“This trend gives us confidence that Australian investors will continue to seek new opportunities in the ETF market to capture attractive buying opportunities,” Mr Walesby said.
“We believe the ETF sector will continue to perform strongly — despite pressure from extreme market circumstances.”