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Self-directed investors embrace ETFs during COVID-19

Opinion

Self-directed investors are increasingly aware and educated about their investments, if ETF trading activity during COVID-19 is any indication, says Kanish Chugh, head of distribution at issuer ETF Securities.

Presenting the latest edition of the ETF Securities Australian ETF Landscape Q4, Chugh adds “In just over three years, the Australian ETF market has doubled its funds under management to over $73 billion[1].

“Increasingly popular with investors looking for cost-efficient and easy access to the market, ETF usage has traditionally been dominated by financial intermediaries, such as advisers, planners, and brokers. This year saw a shift with a huge jump in self-directed usage as investors sought to take control of their portfolios and seek out new opportunities.

  • “Global technology has been the big focus of the year, with investments in the ‘FAANGs’ or the tech sector funds being popular with both buy-and-hold investors and short-term traders. 

    “Leveraged exchange-traded products have jumped in popularity as investors looked to benefit from opportunities presented by more volatile markets this year. Safe-haven assets have also been popular, with gold-backed ETFs a notably strong performer across the year.

    “While trading volumes for ETFs may have settled from March peaks, usage of ETFs is anticipated to continue to grow as is the range of investment options available in Australia. The popularity of new trading platforms with an ETF bent, such as Superhero or Pearler, further aids the take-up of ETFs,” adds Chugh.

    Some of the particular highlights from the report, which includes every ETF available to investors across all Australian issuers, included the doubling of daily traded volume in March to over $772 billion, reflecting the high level of liquidity through the products. Despite daily volumes slowing, normalised assets under management (AUM) continues to grow consistently as the ease of transacting sees broader take-up of investing, particularly among younger investors. 

    As highlighted, the market now includes 216 individual products with a total capitalisation of $73 billion: the sector is clearly here to stay. It has grown through 17 new listings (and 11 delistings) since the previous report and includes a number of technology and leveraged strategies such as ETFS Ultra Short/Ultra Long Nasdaq-100 Hedge Funds (ASX codes: SNAS/LNAS).

    For a copy of the detailed report please click here.


    [1] https://www2.asx.com.au/content/dam/asx/issuers/asx-investment-products-reports/2017/pdf/asx-investment-products-october-2017.pdf


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