Markets

ETF trading at record highs through volatile 2022: Evan Lucas

Fri 17 Jun 22, 1:07pm (AEST)
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Key Points

  • Speaking to Market Index, InvestSmart Chief Strategist Evan Lucas says ETF trading activity remains higher than ever
  • Diversification strategies haven’t changed in current environment, Aussies ought to hold international equities
  • Evan expects stocks to bounce back before EOY, but “volatility is king”

Speaking to Market Index News, InvestSmart chief strategist Evan Lucas says ETF trading volumes remain at record highs through global market volatility. 

The amount of money going into and out of ETFs is higher than ever at the halfway point of 2022, while in 2021, passive ETFs overtook fund management. 

The bottom line is, appetite for popular diversification strategies has not altered during the current turbulence. 

“Diversification is still beneficial, but you have to expect the unexpected in the short term,” Lucas said. 

“History shows time and time again at a minimum of five years you will find diversification of equities across the board will have appreciated in some respect.” 

While the ASX200 1Y chart might look depressing, Lucas expects a bounce back before EOY 2022
While the ASX200 1Y chart might look depressing, Lucas expects a bounce back before EOY 2022

What should Australian investors diversify in right now? 

Lucas noted the ongoing reliability of the ‘barbell strategy’ in the Australian context: mining on one side, banks on the other, and then players like Wesfarmers and Telstra as a ‘bar’ in between. 

“Still, with what’s going on right now, international equities tend to outperform the ASX.

“The ASX is averaging about 9.7% per annum over the last ten years on a total returns basis but international equities are around 10.5%-11%.” 

‘Volatility is king’

InvestSmart’s chief strategist is confident stocks at home and abroad will bounce off the bottom before the end of the year. 

“There will be a point where...it will bounce back,” Lucas said. 

“But the conclusion of all that is that we are talking about volatility.”

Asked to crystal ball the second half of the year, Evan Lucas is clear. 

“Volatility will be king, unfortunately, for the rest of 2022.” 

A look at the 1Y chart for the S&P500 [SPX]. Seeing a pattern? (Source: TradingView)
A look at the 1Y chart for the S&P500 [SPX]. Seeing a pattern? (Source: TradingView)

 

Written By

Jonathon Davidson

Finance Writer

Jonathon is a journalism graduate and avid market watcher with exposure to governance, NGO and mining environments. He was most recently hired as an oil and gas specialist for a trade publication. Email Jon at [email protected].

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