SMSFs driving ETFs towards $10bn mark

The Australian exchange traded fund (ETF) industry is nearing the $10 billion mark, following strong interest from both SMSF investors and advisers, according to State Street Global Advisors (SSgA).

At the end of October, Australian ETFs comprised $9.4bn in assets under management (AUM), an increase from $6.5bn the previous year.

“Year-to-date growth in the Australian ETF market has surpassed 40 per cent, fuelled by financial adviser and continued SMSF investor adoption and their preference for on-exchange access to market opportunities,” SSgA head of SPDR ETFs Australia Amanda Skelly said.

“High yield investing has been a favourite for Australia investors for quite some time and we are now seeing a rapid increase in interest from global investors, with AUM to high yield equity ETFs surpassing $100bn this month.”

The Australian market saw a slowdown in the growth of ASX-listed ETFS over September but it bounced back over the October month, with near record flows of more than $270m.

However, SSgA notes that although the local market delivered some of the strongest returns for months, Australian investors still preferred domestic strategies focused on high yield, despite their underperformance.

Investors also looked to diversify their international exposure over the month. While domestic investors still prefer the US market, interest in Europe is growing following optimism surrounding the recent European Central Bank rate cut.

“While cash flows to the US market remained strong, we saw a pick-up in interest in other markets such as Europe and continued flows to those ETFs seeking broad exposure to international markets,” SSgA said.

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