The March report on the Australian Exchange Traded Products (ETP) market from the ASX clearly demonstrates how investors are reacting to the mayhem COVID-19 has had on world investment markets," said John Dyall, head of investment research at Rainmaker Information.
The Australian ETP market lost $6.7 billion in market value over the month, ending at around $57 billion.
This is down from $64 billion at the end of February, a loss in percentage terms of around 10%.
Despite these losses investors continued to put money into the ETP market with a net inflow of $360 million in the month of March.
A sign of the caution showed by investors is that this was only one quarter of February's net inflows of $1.5 billion.
However, there was a greater turnover of ETPs, with traded value reported at being two and a half times the size of February's traded value ($17.8 billion versus $7.2 billion).
The product with the largest net outflows was the Australian High Interest Cash Fund, which lost $257 million or 13% of funds under management.
The product with the largest increase in assets under management was ETFS Physical Gold, which increased by $189 million on net inflows of $135 million to the end the month with $1.6 billion.
The product with the highest net inflows was Vanguard Australian Shares Index ETF with net flows of $538 million.
On an asset class basis, Australian equities were popular with net inflows of $1.2 billion, with the largest inflows going into market cap index products.
"One would have expected fixed interest products to be popular in this period, but the reported dislocation in fixed interest markets seemed to have an effect," said Dyall.
Fixed interest had the highest net outflows, losing $770million, a significant turnaround from the $488 million it gained in February.
Only one fixed income product, the Vanguard Australian Government Bond Index, had net inflows of any value, and that was only $11 million.
"From a quality and default perspective, this would be one of the safest investments in the Australian ETP market."
International equities experienced a slight outflow of $56 million over February, although they lost $2 billion in assets.
The most notable action was the repositioning of portfolios away from currency unhedged products towards currency hedged products.
Over March the Australian dollar fell 5% against the US dollar and has fallen 13% since the start of the year.
The iShares Core S&P 500 ETF had the largest net outflows of $156 million, while its hedged counterpart iShares CoreS&P 500 AUD Hedged ETF had the second highest net inflows of $115 million.
In fact, the top seven international equities net inflow products were all currency hedged.
Rainmaker Information produces further research on Exchange Traded Products in the quarterly ETP Report.
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Total risk market inflows were down a marginal 0.6% over the year to June 2024, decreasing from $18.3 billion to $18.2 billion.
Dual access ETPs, which are transacted both on stock exchanges and off-market through funds managers, can cost four times as much as the rest of the Australian ETP market.
