More than half of planners use ETFs

The adoption of exchange trade funds (ETFs) among Australian financial planners has continued to grow, with more than half of planners in the country currently recommending ETFs to their clients, according the joint Annual ETF Report for 2018 from BetaShares and Investment Trends.

The study, which was conducted among 8,000 investors and 800 financial planners, said that the percentage of Australian planners who adopted ETFs continued to grow last year and went up to 53 per cent in 2018 from 45 per cent in 2017.

On top of that, a further 16 per cent of planners admitted they were considering starting to use ETFs in their practice over the next 12 months.

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Additionally, the usage of ETFs among self-managed superannuation funds (SMSFs) remained strong and the self-directed, non-SMSF investor segment continued to grow at almost double the rate.

All in all, the number of ETF investors in Australia grew to a record high of 385,000 by October 2018, meaning it had surpassed projections from the previous study.

At the same time, the number of SMSF investors who were using ETFs went up to 120,000 from 105,000 a year ago, the study said.

BetaShares’ managing director, Alex Vynokur, said the continued trend towards ETFs was becoming far more mainstream.

“Investors continue to be attached to the ease of the access, diversification benefits and cost-effectiveness of ETFs,” he said.

“In addition, investors we have surveyed cite the ability to access overseas markets as a key reason for choosing ETFs as an investment vehicle.”

Vynokur also said that over the last five years there was a shift in the profile of a typical ETF investor, with a growing number of younger investors also choosing these investment vehicles.

According to the report, the percentage of millennial ETF investors grew to 29 per cent, up from 19 per cent five years earlier.

Commenting on advisers’ use of ETFs, Vynokur stressed that advisers were facing unique business challenges, with increased scrutiny on the costs of advice, transparency and best interest duties.

“We predict ETFs to continue to be adopted by planners, along with greater uptake of ETF model portfolios as advisers seek to create efficiencies in their businesses, and lower costs for clients.”

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