Understanding how sharemarket indices work is a key to understanding how to use investments like Exchange Traded Funds (ETFs) many of which aim to replicate indices. We’re all familiar with the index of a textbook, but what does a sharemarket “index” tell us about the sharemarket?
What is the NAV?
For any investment in an ETF we can assess its “fair value” by comparing the market price for units (ie the price quoted on the ASX at which you can buy or sell) with the ETF’s “net asset value” or “NAV” per unit. The NAV is essentially the market value of the ETF’s component assets (eg shares in the case of an equities ETF) minus management fees,
The recent pullbacks in the US and Australian share market are a reminder of the inherent risk associated with equities. With the US market bursting through its record high levels (and then suffering as the tapering of QE and uncertainty around the strength of the US recovery resurfaced), and the Aussie market still trading below its pre GFC peak,
Currently, emerging market shares and bond prices are generally experiencing increased volatility and falling prices. Although this is a direct result of tapering by the US Federal Reserve, it is also a healthy sign markets are starting to focus on investment fundamentals – and measured by these standards, many emerging markets don’t pass muster.
Yesterday we released our Australian ETF Review for January 2014, which reported that, for the first time in 20 months, the Australian ETF Industry declined, finishing the month with $9.8B in funds under management. Interestingly, though, the industry actually grew 1.2% by units with ~$150m of new money inflows this month.
One of the issues a number of Australian investors are considering at the moment is how to efficiently and effectively invest in our share market at a time when many companies’ share prices are at near-record highs. For example, “income stocks” like CBA are highly sought after by investors both in Australia and offshore,
The GFC revealed the heavy asset allocation biases of many Australians who sustained heavy losses due to high allocations to (primarily domestic) equities. The events of the GFC led many Australians to look for a more conservative approach to investing. One such approach is to build a “balanced” portfolio, with allocations not only to equities,
In this BetaShares Academy post we look at one of the most misunderstood concepts relating to ETFs – liquidity. To understand ETF liquidity, we need to dig into the concept of an “open ended” fund – and when we do, it becomes obvious why ETFs are typically described as having the same level of liquidity as the underlying assets of the fund.
We recently released our 2013 year-end Australian ETF Review which provides further detail and statistics around the tremendous growth we experienced in our industry last year. 2013 was a hallmark year for the ETF industry, recording its highest ever growth in FuM of $3.5B, and reaching a record high of $10B.
Today we released our Australian ETF Review for November 2013, which reported that the Australian ETF Industry grew for the 18th consecutive month in a row, reaching a fresh record high of $9.6B in funds under management. ETF industry assets grew 3.2% ($297 million) in November with the bulk of the growth ($210 million) attributable to new money rather than market performance.