01 June – 05 June 2015

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Last week was one of contrasts in ETFs with big inflows into Russell Australian Government Bond ETF and the Vanguard Australian Fixed Interest Index ETF. The former saw inflows of $35m while the latter saw inflows of $20.8m. Losers during the week included the BetaShares Australian High Interest Cash ETF with net outflows of $26m and the Russell Australian Semi-government Bond ETF with net outflows of $21.7m.

ASIC worried about synthetic ETFs
ASIC chairman Greg Medcraft says that the rise of synthetic ETFs is reminiscent of the rise of the synthetic collateralised debt obligation pre-GFC. “I saw securitisation emerge as a good … tool to assist the funding of the real economy, but then it all got crazy and wild in the late 2000s,” Medcraft told a Sydney conference. “I must say the emergence of synthetic ETFs troubles me because it has a lot of similarities with synthetic CDOs … You have to question: ‘How do you define an ETF?’ I think there’s a danger of abusing the ‘brand’ ETF,” he said. Plain vanilla ETFs are a “good thing for investors … But it’s not the same – cash and synthetic is not the same. That’s my concern with those,” he said.

ETF growth continues globally
Assets invested in the global ETF/ETP industry broke through the US$3tn milestone at the end of May according to research from London-based ETFGI. At the end of May 2015, the global ETF/ETP industry had 5,757 ETFs/ETPs, with 11,117 listings, from 256 providers listed on 62 exchanges in 51 countries.

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ASX CASH & BOND ETFs*

NAMESYMBOLCLOSE PRICE1m (%)1y (%)MER (%)FUND SIZE ($m)
BetaShares Aust High Int CashAAA50.120.233.240.18770.71
SPDR S&P/ASX Aust BondBOND25.9-1.229.30.2415.68
SPDR S&P/ASX Aust Govt BondGOVT25.76-1.389.820.225.18
iShares Composite Bond ETFIAF105.89-1.128.720.24183.98
iShares Treasury ETFIGB104.98-1.59.380.2616.49
iShares Govt Inflation ETFILB113.6-2.0313.490.2632.26
Russell Aust Select Corp Bond ETFRCB20.32-0.3550.2879.46
Russell Aust Govt Bond ETFRGB21.17-1.7411.590.24133.24
Russell Aust Semi-Govt Bond ETFRSM20.64-0.827.420.26125.78
Vanguard Aust Fxd Int Index ETFVAF49.71-1.18.930.2199.64
Vanguard Aust Govt Bond Index ETFVGB48.47-1.39.550.249.07

*1m/1y performance as at end of April 2015. Closing price as at week end. Return in AUD before Fees

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