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February was the biggest month so far for the exchange traded funds sector in Australia, showing net growth of $1bn to reach $16.9bn as the squeeze on yield prompts investors to become more imaginative with their portfolio construction.
Analysis by YieldReport suggests that the top performing Australian bond ETF over the past 12 months delivered returns of 11.48 per cent and was the SPDR S&P/ASX Australian Government Bond ETF, followed closely by the Vanguard Australian Government Bond Index ETF that returned 11.19 per cent over the same period. The only cash ETF in Australia, the Beta shares Australian High Interest Cash ETF, returned 3.36 for the past 12 months.
According to the same YieldReport analysis, total funds under management in Australia in the cash and bond ETF sector reached $1.465bn, with over half of that total, or $750m coming from the solitary cash ETF from BetaShares. The Australian ETF market as a whole saw growth of almost $2bn in the first two months of 2015, giving some sense of the growth of the sector in an increasingly low interest rate environment.
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