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New ETFs see success as UBS suspends funds

New research from ETF Securities has revealed that three new exchange traded funds (ETFs) saw tens of millions in inflows during the second quarter, while six UBS products exited the market.

The products included ETF Securities' ETFS FANG+ ETF on March 2, BetaShares' S&P/ASX Australian Technology ETF launched March 4, and Van Eck's Emerging Income Opportunities Active ETF on February 13.

ETF securities chief executive Kris Walesby said the interest in these new products reflect investor's confidence in the asset class, despite COVID-19 spurred volatility and disruption.

"These new funds have seen capital inflows of over $60 million to date," he said.

"This trend gives us confidence that Australian investors will continue to seek new opportunities in the ETF market to capture attractive buying opportunities."

However, May 11 saw the removal of six UBS ETFs from the ASX. These included the UBS IQ MSCI Asia APEX 50 Ethical ETF, UBS IQ MSCI Australia Ethical ETF, UBS IQ Cash ETF and the UBS IQ Morningstar Australia Quality ETF.

Still, interest in ETFs has increased dramatically, Walesby said.

"According to recent data from the Australian Stock Exchange, pre-COVID-19 crisis ETF trades accounted for approximately 4% of total trades on the ASX but during the COVID-19 pandemic, this ballooned to about 10% of total trades," he said.

"This may be a reflection of the appeal of diversification and versatility that ETFs can offer to investors.

"They realise that they can access a variety of asset classes at a relatively low cost and can be used as the building blocks of multi-asset portfolios."

During the early stages of the pandemic, investors rushed to ETFs with exposure to traditional safe havens - like precious metals, gold, and broad-based market ETFs, Walesby said.

However, more recently investors had shifted to ETFs with exposure to Australian equity and property, he said, as well as an increase in shorter-term trading activity, with traders turning to cash, commodities and geared funds.

"We believe the ETF sector will continue to perform strongly- despite pressure from extreme market circumstances," Walesby added.

Read more: UBSETF SecuritiesASXExchange Traded FundsKris Walesby
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