FI to continue to lure investors in 2023

Oksana Patron

1 February 2023

The bounce in fixed income (FI) exchange traded funds (ETF) flows in 2022 indicates that this asset class will continue to resonate into 2023, according to Betashares.

Fixed income among Aussie ETF investors in 2022 received $3.6 billion in net inflows, which represented an increase from $2.9 billion in 2021.

At the same time, unlisted FI funds in Australia saw aggregate outflows of $3.6 billion, with the majority of unlisted fund outflows coming from active managers, Betasahes said.

According to the recent survey by 2022 Betashares and Investment Trends, 12% of ETF investors invested in Aussie FI while 8% chose to allocate to the international fixed income.

Overall, the Australian ETF industry saw $13.5 billion in net inflows last year.

Betashares’ senior investment strategist, Cameron Gleeson, said that a normalisation of monetary policy caused significant volatility in fixed income over 2022, but after years of ultra-low rates investors finally saw attractive bond yields again.

“In light of this regime change, many investors took the opportunity to reposition their fixed income portfolio allocations,” he noted.

“Like other asset classes, it is clear investors are turning to ETFs to gain exposure to fixed income, particularly core investment grade fixed income. The inherent benefits of ETFs are beneficial for fixed income exposures within a portfolio as they provide convenient and cost-effective diversification for investors.

“As a result, ETFs are allowing investors from all walks of life – including advised, institutional and self-directed investors – to gain easier exposure to this important asset class.”