The Australian ETF industry recorded another strong month of growth, with total industry FuM at the end of May hitting a new high as the industry nears the $30B mark. Total industry FUM at month end was $29.0B, with growth of 2.6% or $730M for the month. In a month where the Australian market tumbled, almost all the growth came from net new money, rather than asset appreciation.
One of the many benefits of ETFs for investors is their tradability. Unlike traditional funds, ETFs can be bought and sold at any time through the Australian Securities Exchange just like an ordinary share. But since ETFs trade like shares, investors may mistakenly attempt to evaluate their liquidity in the same way they might for shares. This gives rise to one of the most common misunderstandings about ETFs, namely, that an ETF’s ‘on-screen’ volume equates to ETF liquidity. For most ETFs, nothing could be further from the truth!
