ETFs - a tool for these difficult times

Tuesday 28th April 2020 Penny Pryor

As an incredibly liquid investment product, exchange traded funds have been a very useful tool for many investors – both institutional and retail – during the recent market volatility.

Overall funds under management in exchange traded products fell during March, in line with the market (April data will be released later this week or early next week) but inflows rose and volume traded tripled over the month. Inflows were $339 million in March while volume traded in exchange traded products on the ASX was $17.8 billion, up from the $7.2 billion traded the previous month.

The below highlights the inflows and outflows into various asset classes with investors more interested in Australian equity than international equity or Australian fixed income in March. Global fixed income also experienced outflows.

ASX Chart March

SOURCE: ASX

The March data compares to February fund flows below.

ASX Chart Feb

SOURCE: ASX

Major ETF providers in Australia like BetaShares (with 54 products on the ASX) and ETF Securities (with 17) report they have had a strong February and March.

“We have actually been growing quite significantly over the past few months,” BetaShares chief executive officer Alex Vynokur said.

“The last few months have been the strongest ever…we are definitely not putting things on hold.”

And ETF Securities’ chief executive officer Kris Walesby said inflows into their ETFS FANG+ ETF, which invests in major US tech companies, rose to $10 million in a seven-week period off a base of just $1 million at launch.

Industry Moves spoke to both Alex and Kris about what goes into launching a ETF and you can read our Q&As with Alex here and Kris here.

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