ETFS RACE AHEAD OF OLDER LICS

Money Magazine Australia - - INVESTING ETFs -

The ETF sec­tor con­tin­ues to grow strongly, with the to­tal funds un­der man­age­ment ($42.3 bil­lion) ex­ceed­ing that of the 82-year-old listed in­vest­ment com­pany (LIC) mar­ket by a good $60 mil­lion. The first LIC was listed in Aus­tralia in 1936 and the first ETF in 2001. Since the GFC in 2008 the ETF mar­ket has grown at an av­er­age of 39%pa com­pared with a more sub­dued 11.5%pa for LICs. A crit­i­cal part of the ap­peal of ETFs is their cost ef­fec­tive­ness, ac­cord­ing Alex Vynokur, CEO of Be­taShares. The av­er­age as­set-weighted fee in the ETF in­dus­try is 0.22%pa ver­sus the av­er­age LIC fee of 0.66%pa, ex­clud­ing any per­for­mance fees. There are dou­ble the num­ber of ETFs, with 241 listed on the ASX com­pared with 110 LICs. Vynokur pre­dicts that the ETF in­dus­try will con­tinue to grow quickly and ex­pects it to be dou­ble the size of the LIC mar­ket within four or five years.

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