U.S. Cash Helps Australia ETFs Weather Brutal Market Slide
U.S. Cash Helps Australian ETFs Weather Brutal Market Sell-Off
(Bloomberg) -- U.S. investors are helping Australia’s exchange-trade funds withstand one of the roughest periods for financial markets.
So far this quarter, American investors have pumped more money into ETFs concentrating on Australia than in any other country except Switzerland. About $182 million of the net inflows to Australia came from U.S.-domiciled funds, according to data compiled by Bloomberg.
Australia has been one of the most successful nations at flattening the Covid-19 curve and is beginning to ease lockdown restrictions. Even before that became apparent, investors had been piling into the nation’s ETFs. The local industry attracted A$3.8 billion ($2.5 billion) of inflows in the first three months of the year, making it the third-strongest quarter on record, according to figures from the Australian Stock Exchange and Vanguard Group Inc.
U.S. firm VanEck is seeing “considerable flow and client inquiries” for its equal-weight and property ETFs targeting the country, according to Arian Neiron, managing director and head of Asia Pacific in Sydney. “Low Covid-19 -- call us the lucky country -- Australian equities are oversold, and a lot of macro funds e.g. hedge funds are looking at oversold assets in this region,” Neiron said in an email.
Read: German, Australian Funds Lure U.S. ETF Cash as Virus Sways Flow
During the coronavirus-induced sell-off, investors rotated out of cash and corporate-bond ETFs and into Australian equities, according to Morgan Stanley Wealth Management Research. It estimated net inflows of more than A$640 million between Feb. 19 and March 31, when the benchmark S&P/ASX 200 Index tumbled almost 30% and entered a bear market. Net flows for Australian funds have reached $3.3 billion this year, according to data compiled by Bloomberg.
BetaShares Holdings Pty, one of the largest domestic ETF providers, is seeing a pickup in interest from foreign investors even as there’s increasing demand from Australians to invest in other parts of the globe, Chief Executive Officer Alex Vynokur said.
“Global exposure is more relevant than ever,” Vynokur said.
©2020 Bloomberg L.P.
