After a strong 14 months, the Australian ETF industry experienced a month of negative growth, with funds under management falling by $2 billion, according to the February BetaShares Australian ETF Review. But capital inflows remained strong at $1.6 billion, with the decline entirely attributable to falling asset values as markets fell in the last week of the month.
“Even though many investors’ portfolios have clearly suffered from the recent drop in stock prices, it is remarkable that ETFs performed as expected during a very difficult period,” said Alex Vynokur, CEO of BetaShares.
“On several occasions in the past, concerns have been raised that ETFs have not been tested in rapidly falling markets. In our opinion, the fact that ETFs provided liquidity and efficiency in this “real” test of extraordinary volatility dispels these doubts.
Global equities continue to receive the largest inflows – $935 million – with fixed income second at $306 million. Australian and Asian stocks sold off as investors appeared to view the US market as “more likely to weather the current economic storm”.
BetaShares’ three “short” stock funds have also seen an increase in trading volumes since the market rout began, with average daily trading volume and average daily number of trades 10 times higher than in 2019 .
“With bearish market sentiment taking hold, many investors are looking to protect their portfolios or take advantage of market falls,” Mr. Vynokur said.
“Increased trading volumes in our range of ‘short’ equity funds indicate that investors view these vehicles as a liquid and convenient vehicle to express their bearish views.
