Australia’s exchange-traded product (ETP) market is projected to finish the year at $35 billion in assets, with investors increasingly opting for low-cost exchange-traded funds (ETF), according to VanEck.
Data from VanEck and the Australian Securities Exchange showed ETP assets ended October at a record high of $33.22 billion, compared to $23.95 billion in October 2016, representing growth of 39 per cent.
Year-to-date flows to 30 October 2017 stood at $6.087 billion, just short of the 2015 record of $6.091 billion.
VanEck managing director Arian Neiron said: “Investors are using ETPs to access markets offshore and broaden their portfolios, as well as take advantage of smart beta ETFs, which offer targeted investment outcomes and wealth-building strategies.”
Out of the 131 listed ETFs, 41 were now smart beta, or almost one in three.
International equity ETPs were the most popular, with $2.66 billion in year-to-date flows, compared with $1.95 billion for Australian equity ETPs.
While dedicated European and emerging market equity ETPs had been popular, with investors seeking value and performance in those markets, broad-based international ETFs had witnessed maximum flows into international equity ETPs, Neiron said.
With regard to Australian equities, smart beta performed strongly, with flows to the VanEck Vectors Australian Equal Weight ETF totalling $148 million over the year to date. This has outperformed the S&P/ASX 200 Index by 2.07 per cent so far this year and by 4.04 per cent a year over the past three years, Neiron noted.
Fixed income ETPs experienced flows of $450 million over the year to date and cash ETPs have witnessed flows of $468 million.