ETF Review: inflows not enough to offset market fall

Australian exchange traded fund (ETF) industry saw a second month of industry declines in October, as robust inflows were not enough to offset sharemarket fall, according to Betashares Australian ETF Review.

The Australian ETF Industry fell by 1.9% month-on-month, for a total monthly market cap decrease of $2.8 billion. At the same time, industry funds under management (FUM) ended the month at $150.1 billion, $6 billion off the all-time high figure set in August.

However, the falling markets did not dampen ETF demand, as robust inflows of $1.8 billion recorded in the month stood at the second highest level of net flows this year.

According to the review, over the last 12 months the industry has grown by 14.0%, or $18.4 billion but only one new fund was launched this month and there were two closures, with Perpetual closing down their unlisted Global Innovation Fund which meant that the listed class (IDEA) similarly closed. In addition, one single XTB exposure closed, in advance of the closure of the entire XTB range in December.

The report also said that cryptocurrency exposures were the best performers this month, and were followed by geared short Australian equities funds which rallied 10% for the month as the Australian sharemarket fell.

Further to that, there was also a strong rise in gold exposure during the month due to rising geopolitical tension.

Australian equities attracted the highest interest from investors, with approximately 50% of the month’s flow ($882 million) coming from this asset class, and it was followed by fixed income which remained the second most popular asset class, having attracted around $550 million in new money.

Outflows remained low at a category level, with investors taking profits and selling out of short US and Australian equities products, which combined saw $132 million of outflows.