Top trends for ETF industry in 2020

The search for yield, investing to offset Australian exposures, thematic investing, bespoke strategies and active exchange traded funds (ETFs) are the top trends for the $60.24 billion ETF market in Australia, according to ETF Securities.

According to the firm, low interest rates meant investors would continue to seek alternative sources of yield, with some still looking at fixed income, but focusing on international options like the US, which had higher interest rate compared to its counterparts.

However, investors concerned about volatility risks for an equity approach might look towards infrastructure ETFs as the sector tended to be less vulnerable to market cycles and movements.

The slowdown in resources and residential property, along with a weaker Australian dollar, might direct investors’ attention to look further for international exposure.

For example, investors were looking at particular growth themes like the middle class in Asia or at sectors not widely available in the Australian market, like technology, the firm said.

As far as bespoke and smart beta strategies were concerned, there was a rise in ETFs using sophisticated rules or algorithms (smart beta) to ‘beat’ the market while still remaining passive, ETF Securities said.

To read more, please click on the link below…

Source: Top trends for ETF industry in 2020 | Money Management