ETF ‘mega trades’ tipped to become commonplace

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The Australian ETF industry grew by more than $2 billion in November, breaking multiple industry records including: monthly net inflows, industry growth and value traded. There were signs of heightened interest from institutional investors.

Total funds under management reached an all-time high of $35.5 billion, representing a growth rate of 6 per cent for the month, according to the latest BetaShares Australian ETF Review.

Net inflows accounted for the majority of funds growth for the month, totalling $1.3 billion. Asset value appreciation added the remaining $700 million to the monthly increase.
Average daily trading value increased by 38 per cent from the previous month, reaching a high of $3.7 billion for the month.

Alex Vynokur, BetaShares managing director, said: “The growth across all metrics in the ETF industry is impressive. The increased demand we’re currently seeing can likely be attributed to the core benefits offered by ETFs to investors – cost-effectiveness, access, transparency and liquidity.”

Australian equities once again received the largest amount of new money for the month. This included the largest single trade into an ASX-quoted ETF – a trade of $430 million into a broad Australian equities ETF, believed to be from an Australian institution.

Vynokur said: “Although institutional adoption of ETFs has been slower than with the retail market, we are seeing more Australian institutions adopting ETFs as part of their investment portfolio. As such, we expect mega-trades like this to start becoming increasingly common in our market.”

November also saw a total of six new products launched, including the first active ETF offering exposure to a portfolio of Hybrids – BetaShares Active Australian Hybrids Fund (managed fund) (ASX: HBRD). In addition, a new Australian ethical ETF (ASX: FAIR) was launched as well as several funds providing exposure to multi-asset portfolios.

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