After 14 solid months, Australia’s ETF industry posted a month of negative growth, with funds under management falling by $2 billion, according to February’s BetaShares Australian ETF Review. But inflows remained strong at $1.6 billion, with the decline driven entirely by falling asset values ​​as markets tumbled in the last week of the month.

“While many investors’ portfolios have clearly suffered from recent declines in stock prices, it’s remarkable that ETFs have performed as expected during a very difficult period,” said BetaShares CEO Alex Winokur.

“At various times in the past, concerns have been raised that ETFs are untested in rapidly falling markets. In our view, the fact that the ETFs delivered liquidity and performance in this ‘real-life’ test of extreme volatility removes these doubts.”

Global equities continued to receive the largest levels of inflows at $935 million, with fixed income coming in second at $306 million. Broad Australian and Asian shares were sold off as investors appeared to view the US market as "better able to weather the current economic storm".

BetaShares' three "short" equity funds have also seen increases in trading volumes since the start of the market rout, with average daily trading volume and average daily trades 10x compared to 2019.

"With bearish market sentiment coming to the fore, many investors are looking to protect their portfolios or profit from market declines," Mr. Winokur said.

"The increase in trading volumes in our portfolio of 'short' equity funds indicates that investors are finding these instruments a liquid and convenient vehicle to express their bearish views."