Australian ETF growth surges

• By Keith Griffiths on 9 November 2011
• Money Management

Australian exchange traded fund (ETF) market capitalisation continued to grow in October, more than doubling its September intake, according to the latest BetaShares Australian ETF Review.

Currently the ASX ETF market cap is trading around $5.2 billion. The review also highlighted that October was one of the largest month-on-month increases in ETF growth, with 7 per cent or $342 million in new units created. This compares to 3 per cent on average over the last 24 months.

"Also encouraging was the strong trading and inflows across a variety of asset classes," said Drew Corbett, head of investment strategy of BetaShares.

International ETFs saw net buying and trading volumes increase "indicating a perceived value in global equities," the report stated.

With the increased volatility in the AUD/USD the currency ETF also was also popular, increasing 32 per cent in traded volume over the period.

Precious metals had a mixed couple of months with new money going into silver, platinum and palladium. However, unhedged gold holdings had net outflows of $14 million, with hedged gold ETFs receiving approximately $5 million in new money.

Creation and redemption activity was mixed across the providers. The State Street broad S&P/ASX 200 ETF had significant net new money of around $64 million, while the Russell Dividend ETF had a significant net redemption of $42 million. iShares had increased interest in emerging market ETFs and experienced a 23 per cent increase in October to over $600,000 per day, the report found.