The use of exchange-traded funds (ETFs) among the financial planners is set to grow, with 43 per cent of Australian planners already delivering advice on ETFs to their clients, according to a joint study by BetaShares and Investment Trends.
The report, which was based on responses of almost 9,000 investors and 592 financial advisers, found that seven out 10 planners currently recommended ETFs or were planning to do so in the future.
The planners most often cited low cost as one of the reasons they were attracted to the product, followed by diversification, which was the second most common driver.
The total number of Australian investors using ETFs grew at an annualised rate of 31 per cent year-on-year to 265,000 in the 12 months to September 2016, with a high proportion of significantly younger investors among the new ETF users.
According to the study, the demand for ETFs was also on the rise among retail and self-managed super fund (SMSF) investors, with 70 per cent of them indicating they would consider re-investing in ETFs in the next 12 months.
Furthermore, this group of investors mostly represented ‘new money’ into the industry, with 56 per cent buying the products with investment monies rather than by decreasing their allocation to direct shares or managed funds.
Also, the number of SMSFs holding ETFs grew in line with the increase in the number of ETF users and represented 38 per cent of the investors.
Access to overseas markets and specific investment types were the most important reasons among the SMSFs who chose to use ETFs.
Millennials were also expected to be one of the most important drivers of future ETFs growth and, according to the report, a record 315,000 Australians would be invested in ETFs by September.
BetaShares’ managing director, Alex Vynokur, said that ETFs continued its strong growth in 2016 and became ‘increasingly mainstream’.
“No longer a niche investment vehicle, ETFs now provide low-cost, liquid and transparent access to a diverse range of asset classes and exposures,” he said.
“The ETF industry is set to continue on its growth path, and is following in the footsteps of more mature ETF markets around the world.”
“One of the most dynamic investment vehicles available, we are confident that investors will continue to tap into ETFs for a broader range of investment needs.
