The meteoric rise of passive funds in Australia continues to hit new highs, the latest inflow figures reveal.
Total funds under management in exchange traded funds listed on the ASX at the end of February was more than 26 billion, a growth of 3.6 per cent or $911 million for the month, according to the latest Betashares ETF report.
The growth for the month was evenly split between appreciation in asset values and net new money, with $476m of net inflows this month, according to the report.
Indeed, the Australian exchange traded product (ETP) market has grown at a 30 per cent compounding annual growth rate since the middle of 2004, according to the Betashares numbers.
A combination of rising investment markets and an investor backlash against active manager fees has seen more money flowing into passive style funds.
The shift from active to passive funds has been so strong it’s changing the way some are valued depending on where they’re positioned in relation to the index, as discussed recently here.
There are now 202 ETPs trading on the ASX; the average trading value of the group is up 13 per cent on last month in line with the rise of the broader global equities markets.
The Betashares report shows strong flows over the last month into US equities products, which continue to outperform domestic equities market products.
Flows were also strong in Australian Equity Income products recently, the report finds.
At a time when the US equities markets are reaching all time high price/earnings valuations, investors appear to be favouring US equities over other global equities markets, the Betashares research highlights.