As global sharemarkets recovered, the Australian exchange traded fund industry continued its growth trajectory finishing the month with $21.3 billion in funds under management – this 3% increase for the month represented total growth of $685 million.
New money allocated into the industry accounted for 64% of growth in March ($438 million), with the remainder of the growth deriving from asset value appreciation.
Despite the sharemarket rebound, $40 million of inflows went into bearish exposures, particularly in the Australian Equities Strong Bear Hedge Fund (BBOZ), signalling that many investors believe the recent rally may not be sustainable and are therefore hedging their portfolios against the risk of market declines.
Market Size & Growth
- ASX Exchange Traded Funds Market Cap: $21.3B
- Market cap growth for month: +3.3%, +$685m
- Market cap growth for last twelve months: 20.0%, +$3.6B
Comment: As global sharemarkets rebounded, the Australian ETF industry grew ~3% for the month. This was as a result of both net inflows as well as asset value appreciation. The industry ended a mere $16m short of the all time highs of December 2015 to end the month at $21.3B
- New unit growth for month (units outstanding by number): 3.0%
- Net new money (units outstanding by $ value): +$442.7m
- 159 Exchange Traded Products trading on the ASX
- No new products launched this month, 10 funds closed (all being ETF Securities commodities products)
Comment: In a sign of maturity for the Australian exchange traded product industry, 10 products were closed during the month of March 2016. The closed products were from ETF Securities and provided various exposures to commodities – all the products were sub-scale and total industry outflows resulting from these closures was less than $1.5m. We view product closures as a sign of industry maturity, and while not yet common in Australia, are a ‘business as usual’ feature of larger markets such as the U.S.
Average trading value decreased -2% month on month
Best performers this month were BetaShares Geared Australian Equity Hedge Fund (GEAR) and Geared US Equity Hedge Fund (GGUS)
Comment: Investors in the BetaShares Geared Funds (GEAR and GGUS) were rewarded with the best performance in the industry this month, with each fund recording ~10% return for the month
Top 5 category inflows (by $) – March 2016
|Aus. Equities – Broad||$116,597,139|
|International Equities – Global||$49,100,212|
|Aus. High Income||$41,769,229|
Comment: Australian Equities saw the greatest gains becoming the highest inflow category during March, up from fifth in February. Significant inflows were also received by the BetaShares Australian High Interest Cash ETF (AAA).
There were no outflows at a category level recorded for the month.