As cash rates remain at historical lows, making traditional investments less attractive than ever, investors (particularly retirees and self-managed super funds) looking to add some dimension to their income streams are increasingly turning to exchange-traded funds (ETFs).
" ETFs are becoming one of the most popular investment vehicles for institutional and individual investors."
Danny Laidler, Co-Head of ANZ ETFS and Head of Distribution at ANZ ETFS
In simple terms, ETFs are funds listed and traded on the stock exchange. ETFs allow investors to diversify their investment portfolios through a range of traditionally harder-to-reach investment classes, including global equities, commodities and foreign currency. ETFs can also provide a relatively low-cost diversification as investors can get exposure to hundreds of companies with a single trade.
Globally, ETF growth shows the popularity of this investment, with more than $US2.6 trillion invested in over 5,000 ETFs worldwide, according to research and consultancy firm ETFGI.
At ANZ we have watched this trend develop and it has become clear we should have products fitting this demand which is why we have launched six ETF products through a new joint venture.
We'll initially offer three equity ETFs, a physical gold ETF and two foreign currency ETFs (US Dollar and Chinese Renminbi), products we believe will resonate with local investors.
This will be the first time Australians can invest in ETFs issued by a big-four Australian bank and we think it will further help to bring ETFs into the mainstream by making them more accessible for the retail investor both in terms of product access and industry education.
Our thinking is this: in less than 20 years, ETFs have become one of the world's most popular investment vehicles for both institutional and individual investors, amid claims they offer investors tax-efficient, easy access to a variety of 'harder-to-reach' asset classes at a relatively low cost.
When the first ETF was launched in the US in 1993, no one quite anticipated how exponentially ETFs would grow over the years to come. At first, ETFs were primarily marketed to institutional investors for hedging, transition management and tax-loss harvesting. However by 2008 US retail investors accounted for nearly half of the total assets held in ETFs. This 'alternative investment' had entered the mainstream.