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FIVE at FIVE AU: ASX lifts; ETFs outpace managed funds; PM calls cost-of-living crisis meeting with cabinet

Published 22/01/2024, 04:02 pm
© Reuters.  FIVE at FIVE AU: ASX lifts; ETFs outpace managed funds; PM calls cost-of-living crisis meeting with cabinet
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The S&P/ASX200 is up today, gaining 47.40 points or 0.64% to 7,468.60.

The index has lost 0.40% for the last five days but is virtually unchanged over the last 52 weeks.

Sector-wise it was a bit of a mixed bag. Consumer Discretionary stocks were up 1.60% at the end of the day, while Consumer Staples, Financials, Communication Services and Real Estate were all up by around 1% or more.

Utilities and Materials were a drag on proceedings, while everything else was fairly even.

ETFs surpass managed funds

In 2023, the total assets in exchange-traded funds (ETFs) surpassed those in managed funds in both the US and Australian markets for the first time.

In the US, passively managed funds, which include ETFs and index funds, held assets totalling US$13.29 trillion by the end of the year, slightly exceeding the US$13.23 trillion in active funds.

Similarly, the Australian ETF industry achieved a record high in 2023, with a market capitalisation of A$177.5 billion. The year witnessed a substantial investment in ETFs, with A$15 billion flowing into these funds. By contrast, active funds experienced a decline, with an A$36.9 billion outflow.

The increasing popularity of ETFs among investors is attributed to their simplicity, low cost and diversification benefits. Young investors, in particular, are showing a preference for ETFs, foreshadowing a generational change in investment patterns and preferences.

PM summons cabinet

The PM has convened an early cabinet meeting in Canberra, ahead of the parliamentary session, to discuss the country's economic and cost of living challenges. The meeting, scheduled for Wednesday, will address the increasing financial pressure on Australians due to high inflation and rising energy costs post-COVID-19.

Interest rates have risen significantly since the pandemic, influenced by domestic and international factors.

Social Services Minister Amanda Rishworth expressed the government's focus: "We need to see inflation coming down ... our government's been very focused on finding cost of living relief that doesn't add to the inflation challenge."

A Senate inquiry into supermarket prices has also been called to highlight the government's commitment to tackling these economic issues comprehensively, after shoppers and farmers complained big retailers were taking advantage of rising prices.

"We're coming together early," Health Minister Mark Butler told reporters on Sunday.

"The Prime Minister has called his caucus colleagues even though parliament doesn't commence again for a couple of weeks because we recognise Australians are doing it tough."

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