New Data Shows Soaring Inflows to Bond ETFs

Financial Planners


Eileen Gearamacia (left) and Ron Memet

Australian investors continue to look to ETFs to access fixed income, the third most desirable asset class within the sector, according to the latest ASX data.

In the year to April, fixed income ETFs had the fastest growth of all ETF asset classes, up nearly 34% to $20.84 billion, ranking third behind international equities and Australian equities.

Irene Giamacia, Head of Investment Trends Research, Speaks professional planner The trend also exhibited a “huge domestic bias” towards domestic bonds, which was unique compared to the international bias towards Asian and European investors.

“There could be a number of reasons… maybe we are a little out of touch. “It’s a little late,” she says.

“Tax settings that don’t apply to domestic products may not apply to global products, so perhaps consumer tastes will change. We’ve seen this many times. , is always a bit cryptic. We really love our stuff.”

Reflecting this domestic bias, ASX data shows that Australian fixed income assets under management rose to $12.72 billion in the year to April, while global fixed income reached $14.14 billion. bottom.

“Bonds are the third asset class that Australian investors have access to through ETFs, after domestic and global equities,” she says.

“We have seen year-on-year growth, as well as additional information from both advisors and investors regarding their intentions to use more bonds in the future. The trend in recent years has actually increased considerably.”

Ron Mehmet, senior investment consultant at Roncec, said he expects more actively managed bond ETFs will be available to investors this year, perhaps favored by younger investors and financial advisors.

“What we are seeing is a shift in demographics across financial planning groups,” says Mehmet.

“We found that many men in their 40s, 50s and older are accustomed to using this tool all the time. [managed] funds. ”

Mehmet said young planners in the profession are reluctant to go to directly managed funds, and would rather access investment vehicles through exchanges.

“The reason is that they can just go to CommSec or an exchange or NAB exchange and buy an ETF and they don’t want to pay a platform fee like 50 basis points,” he said.

“You can now buy physical bonds on ASX, other exchanges and Cboe. At the end of the year, these discount brokerages will provide free paperwork, valuation and trading.

“What we’re seeing, after talking to a number of fund managers over the last year and this year, is that active fund managers are now entering the ETF and listed space with their funds. .

Over the past two years, active managers have diversified their products by using exchange-traded active funds as a means of distribution, Mehmet said.

“If you only have traditional funds, and you’re a fund manager, and a lot of people use ETFs and a lot of listed-type vehicles, you’re effectively missing out on about 37 percent. It’s a growing market,” he says.



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