Exchange-traded funds pass $20 billion mark

Exchange-traded funds (ETF) grew by about 7 per cent in October – the second largest increase on record – to pass the $20 billion mark for the first time.

The popularity of the sector, which provides ultra low-cost, broad exposure to asset classes such as shares and property, has surged in recent years. The sector has posted compound annual growth of 32 per cent a year since July 2004.

There are a broad range of ETFs listed on the Australian Securities Exchange (143 exchange-traded products in total). The most popular ETF categories in October were global equities, Australian high yield, cash, and Australian equities. The largest ETF remains the SPDR S&P/ASX 200 Fund ($2.95 billion) followed by the iShares S&P 500 ($2.08 billion).

Global equity-focused ETFs, such as the iShares S&P 500, have attracted a significant amount of support in recent times as investors diversify away from the Australian sharemarket, which represents just 2 per cent of global markets.

Ignition Wealth uses a range of quality ETFs to build diversified portfolios with exposure to a range of asset classes.

Read more about recent growth in the ETF sector here.